Tesco – major savings to be made from Booker buy-out

In its H1 trading statement, Tesco has announced it is set to make £60 million in savings from its take-over of Booker.

Tesco’s Middleton and Magor distribution centres are now being used by Booker to support growth, use spare capacity and enable the group to reduce the lead time on orders for Booker customers.

So far, said Tesco: “We have already delivered £16m of the synergies identified in the Booker merger process and are well on track to deliver at least £60m in the full year. Suppliers are benefiting from access to our combined sales growth and we have now completed negotiations of new terms with our top 60 suppliers. In addition, we have consolidated a number of core business services across Tesco UK and Booker.

“Our cost savings programme is progressing well in the UK as we continue to deliver efficiencies across our store operating model. Our strategic focus on maximising the mix within our business led to the closure of Tesco Direct in July. The operating loss relating to Tesco Direct was £23m in the first half with one-off closure costs of £57m treated as an exceptional item.”

Group operating profit rose 24.4 per cent to £933m in the first half, while group sales were up 12.8 per cent to £28.3 billion.

Chief executive Dave Lewis said: “We completed our merger with Booker in March and are delighted with performance so far. We announced a strategic alliance with Carrefour in July which goes live this month. And we are now more than half-way through the biggest own brand re-launch in our nearly 100-year history, including a significant investment in over 300 new ‘Exclusively at Tesco’ products at market-leading prices.”