Despite growth, Tesco cautious on its recovery

Tesco, Britain’s biggest retailer, said its recovery was gaining pace but warned a supermarket price war meant profit growth would be hard to deliver this year.

The company, hammered by an accounting scandal and the rise of German discount chains, yesterday reported a first rise in underlying annual profit growth in four years and its first quarter of underlying UK sales growth for over three years. But it said there was much more work to do.

Shares in Tesco — which controls 28% of Britain’s grocery market and controls about a quarter of the market in the Republic — have risen 31% so far this year on recovery hopes. Its shares fell almost 6% yesterday.