UK: Tesco "breadth" drives profit growth
Tesco has this morning (14 April) booked a 12% rise in annual profits with the UK retailer's international markets now accounting for half the company's earnings.
The company posted underlying pre-tax profits of GBP2.8bn (US$5.5bn) for the year to 23 February, as sales climbed 11% to GBP51.8bn.
International sales jumped 25.3% to GBP13.8bn, driving a 24.3% rise in profits, Tesco said. Overseas markets now account for 50% of earnings.
Tesco CEO Sir Terry Leahy said the "breadth" of operations had helped the business grow in "challenging" market conditions.
He added: "We begin the new financial year confidently - with a good start in the UK, excellent progress in our established international markets and promising early performance from our investments in future growth, particularly in the United States, China and Turkey."
Tesco's US venture, Fresh & Easy, has faced some fierce criticism since its launch in November. The company today insisted it is "very encouraged" by the early performance of the business.
"Sales are ahead of budget and sales densities are already higher than the US supermarket industry average, with our best stores exceeding $20 per square foot per week," the company said.
Tesco said its losses from the Fresh & Easy venture had reached $62m, below its target of $65m. The company said losses would rise to $100m this year before falling as rising volumes eat into overhead costs.
Tesco's sales in Asia leapt 27.2%, with profits up 23.6%. A clutch of "strong performances" in Korea, Thailand and Malaysia led to increased margins in Asia, while Tesco's Chinese business made a "small trading profit".
Turkey and Ireland drove strong sales in Europe, which rose 23.9%. Profits on the continent climbed 24.8%.
In the UK, Tesco saw a 3.5% rise in like-for-like sales, excluding petrol. On a consolidated basis, sales increased 6.7% to GBP37.9bn.
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