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Tesco (LON:TSCO) has scrapped plans to sell-off Dunnhumby, the data analysis business behind the Clubcard loyalty scheme, despite profits slumping in the first half of the year.
Britain’s biggest supermarket posted operating profits of £354mln in the first six months of the year, compared to £916mln in 2014, a drop of some 55%.
The beleaguered supermarket giant did manage a small pre-tax profit of £74mln, from a loss the previous year.
Sales were around 2% lower as Dave Lewis, chief executive, noted the market remains “challenging,” adding that full-year expectations remain unchanged.
There were some signs of a recovery, as like-for-like sales in the UK improved in the second quarter, despite deflationary prices.
“In the UK, customers are responding well to improvements in our core offer and we are seeing sustained year-on-year growth in transactions and volume,” the company said.
Broker Shore Capital said: “It is fair to say, to our minds at least, that Dave Lewis deserves enormous credit for stabilising a ship that was in danger of sinking.”
It wasn’t all good news, however, as Cantor Fitzgerald noted that Lewis said the new living wage could cost Tesco £500mln and that he would ‘never say never’ on a rights issue.
Hargreaves Lansdown added that there is some concern around Tesco retaining its retail data arm “in the absence, it would appear, of a willing buyer.”
Dunnhumby was expected to be next in line for the chop following the sale of its South Korean business Homeplus last month.
But the expected price of the business has sunk to just £700mln from around £2bn and, following a strategic review, Tesco has retained the business.
Lewis said: "progress will be driven by continuing to increase the level of cash generated from our retained assets."
Shares lost as much as 2% early but were just 1.3p lower almost an hour into trading.