Operating profit at Tesco halved in the first six months of its financial year, underlining the challenge of turning round Britain’s biggest retailer.

Tesco, reeling from a string of profit warnings and a profit overstatement in 2014, said operating profit before exceptional items fell from £779 million (€1.061 billion), excluding its business in Korea, to £354 million (€482 million) in the six months to August 29th.

The retailer sold its Korean arm to MBK Partners for £4.2 billion last month.

But Tesco shelved the sale of Dunnhumby, the data analysis business that runs its Clubcard loyalty scheme, after the auction failed to attract enough interest.

The shares fell more than 3 per cent in early trade to 186p.

On the decision to keep Dunnhumby, Dave Lewis, chief executive, said Tesco had “concluded that – having looked at all the proposals of which there were many – the most value creating option for Tesco shareholders was actually to retain it in the group”.

He also played down the prospect of other disposals, saying that the focus would be on generating cash from operations, rather than selling off other parts of the business.

“We are not looking to make major disposals or sales of assets, in order to help with the balance sheet,” he said. “For all this speculation that we may be selling assets in central Europe, or in Southeast Asia, that is not our intention. That part of the business review is concluded.”

Some analysts continue to believe Tesco will need to resort to a multibillion-pound rights issue to shore up its balance sheet.

But Mr Lewis said that while he could “never say never” to a capital raising, he would prefer “self-help” to improve the group’s finances.

Tesco, like the other “big four” supermarket chains in the UK, has been fighting hard to stem the flow of shoppers attracted to the German discounters Aldi and Lidl.

– (FT)