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Tesco targets further margin improvements

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Tesco targets further margin improvements
FILE PHOTO: A Tesco supermarket is seen, in west London, Britain on September 30, 2008. REUTERS/Toby Melville/File Photo   -   Copyright  Toby Melville(Reuters)
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LONDON (Reuters) – Tesco, Britain’s biggest retailer, is targeting further margin improvements beyond the end of its current recovery plan, it said on Tuesday.

The group said in April it had met or would soon meet most of its turnaround goals, including a key margin target of earning 3.5-4 pence of operating profit for every pound customers spend by the end of its 2019-20 financial year.

On Tuesday Tesco hosted a Capital Markets Day for analysts and investors, focusing on “untapped value opportunities”.

“We have the further cost reduction and mix opportunities that allow us to offset inflation, improve our customer offer and/or increase margin,” it said in a slide published on its website.

The company also said it would be able to enhance cash growth ahead of profit.

Tesco shares were up 1.4% at 1016 GMT.

Other slides referenced opportunities to grow the distribution capacity of its online business by 35% and to develop partnerships such as with urban fulfilment centre firm Takeoff Technologies and delivery robot company Starship Technologies.

Tesco also said it plans to develop its Clubcard loyalty scheme.

Celebrating its 100th anniversary, the group is deep into a recovery plan under Chief Executive Dave Lewis after a 2014 accounting scandal capped a dramatic downturn in its fortunes.

Lewis has revamped relationships with suppliers, lowered prices versus major competitors, streamlined product ranges and improved store standards and customer service.

Last year he bought wholesaler Booker for nearly 4 billion pounds and also introduced the Jack’s discount format.

Last Thursday Tesco reported a slowdown in first-quarter sales growth but said it was outperforming a “subdued” UK market.

(Reporting by James Davey; Editing by Paul Sandle and Jan Harvey)

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