Tesco said today its recovery was gaining momentum as it reported a second successive quarter of UK sales growth, the first time it has done so in more than five years.
Hammered by changing shopping habits, the rise of German discounters Aldi and Lidl and an accounting scandal, Tesco has been fighting back under chief executive Dave Lewis who took charge in September 2014.
"We have stabilised the business and started to generate growth," he said today.
The Tesco CEO's focus is on lower prices, streamlined product ranges, better customer service and simplified relationships with suppliers.
This was the root cause of the accounting scandal that was uncovered shortly after he arrived and is the subject of a criminal investigation by Britain's Serious Fraud Office.
Tesco said sales at stores in its home market which have been open more than a year rose 0.3% in the 13 weeks to May 28, the first quarter of its financial year.
That compared with analysts' forecasts of flat to up 0.5% and built on growth of 0.9% in the previous quarter - its first quarter of UK underlying sales growth for over three years.
The company said that its like-for-like sales performance in Ireland remained positive, increasing by 0.3%, as it continued to cut prices across core food lines.
"I am confident that the improvements we are making for customers are working," Lewis said.
Tesco also said today it had agreed the sale of its Harris + Hoole coffee shop business to Caffè Nero for an undisclosed sum.
Lewis has also cut thousands of jobs and sold businesses in South Korea and Turkey as well as the Giraffe restaurant chain and Dobbies Garden centres, as he looks to simplify the company, cut debt and rid Tesco of its junk credit rating.
CEO Lewis said today that no more asset sales are planned.
Though former Unilever executive Lewis has impressed investors with his decisive action since replacing the sacked Phil Clarke, Tesco's shares are still down 21% year-on-year, reflecting what the CEO called "a challenging market with sustained deflation."
"There are a lot of factors out there definitely not within management's control," he said.
"We need to keep re-building momentum and I'm sure as we perform, that will be reflected in the share price" he added.
The company said today that group like-for-like sales grew 0.9%, boosted by a 3% increase in international sales.
Analysts' profit forecasts for 2016-17 came down in April after Tesco warned that profit growth would be harder to deliver this year than last, given an industry price war.
Finance chief Alan Stewart said Tesco was comfortable with analysts' current consensus of £1.175 billion, up from £944m in 2015-16.
Tesco is holding is annual shareholders' meeting today.
