Tesco (LON:TSCO) announced that its turnaround plan remained “firmly on track”, as sales rose for the seventh quarter in a row.
Like-for-like sales, which is not inclusive of new openings, rose 2.1 percent in the second quarter, just below of market expectations.
Pre-tax profit was also up, rising to £562 million for the first half compared with £71 million for the same period last year.
In a statement, Tesco said: “Market conditions have been challenging with inflationary pressure being felt throughout the half, but we have worked hard with our supplier partners to minimise price increases for customers.
“Our overall sales inflation in the half was around 1% less than the rest of the market, helping us become even more competitive.”
In addition, Britain’s largest supermarket said it would pay a 1p dividend, after announcing a 71.8p percent increase in half year profits to £885 million.
“Today’s announcement that we are resuming the dividend reflects our confidence that we can build on our strong performance to date and in doing so, create long-term sustainable value for all our stakeholders,” said Chief Executive Mr Dave Lewis.
Last week Tesco become embroiled in a scandal involving its chicken meat supplier, 2 Sisters, and its breach of food safety regulations.
It emerged that 2 Sisters had repackaged rejected Lidl chicken, as the Tesco ‘Willow Farm’ brand, prompting outrage.
Mr Lewis said that Tesco was “shocked” by the discovery and that the supermarket had audited the factory’s food quality commitments.
According to Mr Lewis, an inspection conducted last Friday by the Food Standards Authority revealed no safety concerns, and that 2 Sisters had taken “appropriate action” to close the site for the time being.
Tesco is still awaiting the go-ahead for its merger with wholesale retailer Booker Group (LON:BOK), which is currently under investigation by the UK Competition and Markets Authority (CMA).
The company said it remains confident that the authority would deliver its decision on the landmark deal by the end of the month.
Should the merger get the green light, it would see Tesco merge with Britain’s largest wholesaler Booker, in a deal set to be worth £3.7 billion.