City watches as Dave Lewis could unveil Tesco's first dividend for three years this week

Alys Key
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Dave Lewis could be about to unveil Tesco's first dividend in three years (Source: Getty)

Tesco is expected to report a rise in sales on Wednesday, as speculation mounts that the company could resume issuing a dividend.

Analysts at Deutsche Bank say that the retailer's like-for-like sales are likely to rise two per cent for the second quarter, compared to growth of 0.9 per cent in the same period last year.

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Meanwhile some observers say that the company might issue an interim dividend for the first time since current boss Dave Lewis scrapped it as part of his turnaround plan. Tesco's top team has guided in updates regarding its proposed takeover of Booker that it plans to start paying a dividend again during this financial year.

Any dividend announcement would come in the same week as three former Tesco executives face trial for their role in the scandal that precipitated Lewis's appointment.

But Clive Black, an analyst at Shore Capital, thought this was more likely to happen at the end of the year. He said: "Our central expectation is that this would more likely than not to be a final pay-out but we shall watch with interest to see if a token is offered at the interim stage. Such a move would be welcome and express confidence."

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Meanwhile Daniel Ekstein at UBS expected Tesco to hit the upper end of its 3.5 to four per cent underlying earnings margin guidance. Previous UBS research found that Tesco is now on its way to matching Asda's pricing.

"Initial fears of aggressive price repositioning by Asda after new management were brought in last summer have proved unfounded so far," analysts said.

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