Tesco swung into profit and moved back into sales growth as it continued its turnaround. Here are eight things we learnt from its results.

1. Tesco’s recovery is broad-based

While the recovery of Tesco’s UK business rightfully took the headlines today, chief executive Dave Lewis was at pains to point out that this was a “broad-based improvement”.

Group-wide operations, including its businesses in the Republic of Ireland, Europe and Asia, posted an operating profit of £354m during the first half of the year – a figure that increased to £590m in the second half.

Mirroring fortunes in the UK, Tesco’s Irish business moved back into like-for-like growth during the fourth quarter after sales advanced 1%.

Sales improvements during the same period accelerated to 4.1% in Europe and 3.5% in Asia as Tesco celebrated market share gains in five of its seven markets.

Such market share gains remain tough to replicate in the UK as the discounters continue to grow at pace, but Lewis admitted that was a “long-term ambition”.

2. The growth of Tesco’s convenience business has slowed

Despite “stabilising” the business following what he admitted was a period of “crisis”, one blot on the copybook of Lewis and UK boss Matt Davies is the performance of its convenience business.

Growth in UK like-for-like sales at Tesco’s Express stores slowed every quarter during the year.

“Our focus is on supporting how customers shop with us on whatever the right channel is for them”

Matt Davies, Tesco

Having increased sales 4.5% in final quarter of 2014/15, the first quarter of 2015/16 registered a 4.4% uplift in like-for-likes.

Since then, quarterly like-for-like growth slowed to 4.1%, 3.3% and 3% in the final quarter of the year.

Davies maintained that represented “pretty good growth” that he was “delighted with”, but hinted that more customers were returning to its larger Extra stores.

“There is an element of shoppers that have shopped with us in Express and absolutely are using Extras. Our focus is on supporting how customers shop with us on whatever the right channel is for them.”

3. Tesco is rapidly decreasing its use of vouchers and multi-buys

Its big-four rival Sainsbury’s has spoken out about its bid to strip back promotional activity and phase out “the vast majority” of its multi-buy offers, but Tesco is going about a similar strategy – the extent of which was laid bare today.

Lewis hailed Tesco’s “lower, more stable prices”, which have seen a typical trolley of basket staples come down in price from £46.98 to £44.73 since August 2014.

That has been driven by the decision to refocus investment away from money-off coupons, which plummeted 37% during the year, and directly into price.

Similarly, the number of multi-buy promotions in stores was stripped back 32% during the fourth quarter of the year following a gradual move away from such offers throughout the 52-week period.

Multi-buy promotions increased 7% during its first quarter, but subsequent falls of 15% and 26% in quarters two and three allowed Tesco to invest more in everyday low prices instead, although Lewis again refused to reveal exactly how much the grocer had ploughed into price cuts.

4. Tesco has reduced its SKU count by a fifth in some categories

During the year, Tesco completed detailed range reviews of its 33 food categories in a bid to ensure it was stocking the “right range for customers”.

The grocer revealed that work had resulted in an average range reduction of 18% across those categories as it slimmed down its offer.

However, Tesco said that had provided it with room to drive innovation in product and it launched 2,011 new lines during the financial year.

That range rationalisation has continued since the year end with the launch of its seven new Farms brands, covering 76 products across fruit, vegetables, meat and poultry.

5. Tesco bosses believe the Farms brands will be a game-changer

SUNTRAIL FARM Tesco

SUNTRAIL FARM Tesco

Tesco rolled out seven Farms brands

Without saying it so explicitly, Tesco’s executive board clearly believe the Farms brands are a game-changer for the supermarket giant in its ongoing price war with its big four rivals and the discounters.

Lewis described the roll out of the seven brands as “one of the most significant investments” Tesco has made during his tenure and he took great pride in revealing its impact.

That was accentuated by one particular slide. It depicted a basket of Tesco’s entry-level own-label products, including its Everyday Value ranges, which would have cost £103.11 in the past.

Tesco claimed an equivalent shop at Aldi or Lidl, consisting of their comparable private-label lines, costs £89.06.

But according to the grocer, that same shop at Tesco would now cost just £86.35 – 16% less than before and 3% less than the discounters – thanks to the launch of Farms and its wider investments into price.

Tesco wanted to prompt shoppers to ask themselves the question: ‘Why shop anywhere else?’ Such a dramatic shift in price has certainly done that.

6. Suppliers are happy with Tesco’s new approach

Lewis has spoken on many occasions about his three main priorities for the business, one of which is to rebuild trust and transparency among colleagues, customers and suppliers.

Tesco revamped its entire commercial approach, radically simplifying the way it negotiates with its suppliers and reducing the amount of time it takes to pay bills less than £100,000 to 14 days.

The grocer, which previously found itself in hot water for delaying payments to suppliers, said it made 98% of payments on time during the course of the year.

Such changes have had a bearing on feedback received from suppliers, Tesco reported.

When asked how satisfied suppliers were with their experience of working with Tesco, 68% gave positive responses in the second half of the year, compared with 51% during the same period in 2014/15.

7. Tesco now owns more than half of its property portfolio

Another pillar of Lewis’ strategy was to protect and strengthen Tesco’s balance sheet and decisions made regarding its property portfolio are aiding that aim.

In March 2015 it acquired the freehold of 21 of its superstores and in February this year a further 36 superstores and 13 Extra stores were purchased.

On a group-wide basis, Tesco owned 54% of its property by value at the year end. In the UK and Ireland, it owned the freehold of 47% – up 6% on the previous year.

Tesco reaffirmed that its long-term aim is to further increase the ownership of its property in order to reduce the impact of rent inflation.

According to Tesco, the property transactions during the 2015/16 financial year alone will save the business £115m per annum in rent at current rental levels.

8. Tesco staff will be paid a 5% turnaround bonus

Off the back of what Tesco dubbed “a year of significant progress”, all staff will be handed a full turnaround bonus of 5% and colleagues were informed of the decision this morning.

“We owe a great debt of gratitude to the colleagues inside Tesco for doing such a fantastic job and I am delighted that they are going to earn their turnaround bonus”

Dave Lewis, Tesco

Lewis hailed the impact that Tesco’s 500,000 people had across the business during the year, and said they had “given their heart and soul” to being a part of the transformation plan.

“None of the results we talked about today could have been achieved without that commitment and that expertise,” he said.

“We owe a great debt of gratitude to the colleagues inside Tesco for doing such a fantastic job and I am delighted that they are going to earn their turnaround bonus.”