Tesco makes savings in logistics and distribution

UK grocery giant Tesco has made savings of £112 million in logistics and distribution since the plans to cut costs there came into effect in 2016-17. It set a target of reducing overall operating costs by £1.5 billion by the end of the full year 19-20, of which the company now says it has achieved £1.35 billion.

Most of the savings outside of logistics and distribution – £973 million – have come from changes to the Tesco store operating model. Another £267 million has been saved in goods not for resale. At the same time there has been strong growth in sales and profits.

“After four years we have met or are about to meet the vast majority of our turnaround goals. I’m very confident that we will complete the journey in 2019-20. The full year margin of 3.45 per cent represents clear progress and the second half level of 3.79 per cent, even before the benefit of Booker, puts us comfortably in the aspirational range we set four years ago,” said Dave Lewis, leading chief executive.

Group operating profit rose 16.7 per cent to £2.2 billion, while revenue for the year was up 11 per cent at £63.9 billion.

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