Tesco posts 18.7% growth in profit for H1 |
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Wed, 21 Sep 2005 09:05
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LONDON: British supermarket chain Tesco posted an 18.7 per cent rise in profits for the first half ending 13 August in spite of tough market conditions and economic slowdown in the country. The company's pre-tax profits went up to 908 million pounds, while group sales rose by 14.1 per cent to 18.8 billion pounds.
The company said its same-store sales were up 8.2 per cent (6.7 per cent excluding fuel).
The company, however, sounded cautious about second half performance, with chief executive Terry Leahy saying he is not game to raising the target for U.K. same-store sales growth from 3 to 4 per cent. There have been external cost increases in the U.K.,due to higher oil-related costs and increased business rates.
Leahy made a significant announcement -- that Tesco is not bidding for the U.S. supermarket group Albertsons. He said the company would enhance its operations in eastern Europe and Asia, but as much as 80 per cent of its revenue is generated in the U.K.
The profits have come as a result of its increased sales in non-food items like clothing, mobile phones and home entertainment. The company said home entertainment sales grew by 17 per cent, with consumer electronics accounting for a 20 per cent increase and health and beauty going up 11 per cent. Its share of the grocery market is now estimated to be 30.5 per cent, up from 28.1 per cent a year ago, according to research group TNS.
The company meanwhile announced that it is planning to create 7,500 new jobs as it is adding 1.3 million sq. ft. of shopping space during the second half.
The rugged growth the company has been able to achieve has brought in critics. For example, Friends of the Earth has urged the Competition Commission to investigate the company's monopoly position. It said the company's practices have put many U.K. farmers out of business and also created problems for overseas companies who supply Tesco. Rival Asda too has asked the government to launch an investigation into Tesco's domination of Britain's supermarket sector.
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