Tesco’s chief executive declared yesterday that the supermarket group’s crisis was over as he revealed healthy sales growth and set a new profit target that sent the share price soaring. Only a year after recording the biggest loss in British corporate history, Dave Lewis claimed that he had restored stability and was embarking on a new phase to build momentum. (The Times £)

“Tesco’s recovery strategy hailed by investors,” writes The Financial Times (£), noting Tesco shares surged 10% on hopes that Britain’s largest grocer was finally back on track, adding £1.5bn to the company’s market capitalisation in the space of a few hours.

Tesco stayed on the road to recovery today with a third quarter of sales growth - but it was not enough to stop the supermarket giant’s profits falling, writes The Daily Mail. Its strategy of dropping prices helped it boost sales growth by 1%, but statutory half-year pre-tax profits fell by 28.3% to £71m.

Dave Lewis, who was parachuted in from Unilever two years ago to overhaul Tesco, said that the business had been stabilised, but that the job was not yet complete. “We feel we’re extremely stable and now’s the time to step it up,” he said (The Telegraph). Tesco pledged to boost its margin by cutting a further £1.5bn from its cost base, Tesco said, while it intends to increase its capital expenditure to £1.4bn a year on average (The Financial Times £).

Benny Higgins, the boss of Tesco Bank, may have spent £18,000 on taxis in eight months, but the era of largesse at Britain’s biggest grocer is over, writes The Times (£). Yesterday, Dave Lewis, the chief executive turning around the supermarket group, said that Tesco’s drive for efficiency extended to every area of its business.

The Guardian goes for a more negative angle, writing that the pick-up in sales was overshadowed by the £5.9bn hole that has opened up in its pension fund. Tesco said that since February its pension deficit had ballooned from £3.2bn to £5.9bn due to the collapse in bond yields after Britain voted to leave the European Union. (The Guardian)

The Times (£) also highlights worries over Tesco’s pensions deficit with the headline “£5.9bn pension shortfall rings alarm bells across the City”, while Lombard in The Financial Times (£) expresses concern that the growing deficit could signal “danger ahead if the economic landscape hit by an equities rout”.

Christopher Williams in The Telegraph writes: “There’s no prospect of a dividend, the pension deficit has ballooned and debts are spiralling, but Lewis at least threw the analysts a bone in the form of some medium-term guidance on profit margins. The reaction was borderline ecstatic.”

The FT’s Lex column welcomes the progress Tesco has shown under Dave Lewis, but cautions: “Mr Lewis over the past six months has provided compelling evidence that Tesco has put its troubles behind it. This is quite different from suggesting the valuation premium to its peers has been fully earned.” (The Financial Times £)

Away from Tesco, UK petrol station business Euro Garages founded 15 years ago with a single site in Manchester is to become the largest independent fuel retailer in the EU, with annual sales of €6bn, through a merger arranged by TDR Capital. (The Financial Times £)

AG Barr has been forced to recall 84,000 bottles of sparkling mango drink after the product showed signs of fermentation. The firm is recalling four batches of Rubicon Sparkling Mango two-litre bottles because yeast fermentation has resulted in the products becoming unfit for human consumption and bottles liable to explode. (The Guardian)

Shoppers are enjoying a fourth year of falling prices as “intense” competition for customers drives deflation, according to the British Retail Consortium. (Sky News)

China’s largest privately-held agricultural group is seeking to expand in Australia, in spite of a crackdown by Canberra on foreign ownership of farmland and tougher rules governing overseas investment. (The Financial Times £)

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