Leading UK retailer Tesco today [Tuesday] reported sales up 10.6% from £11.5bn to £12.7bn (US$19.4bn) in the 24 weeks to 10 August.
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Pre-tax profits rose to £545m from £481m in the year-ago period, excluding an exceptional loss derived from the disposal of fixed assets and goodwill amortisation.
Tesco said its international expansion campaign was on track, with global non-food sales now standing at £7bn, up 32%, and international profits up 79% on last year. The group said it is on track to achieve its targets, including £140-160m operating profit from developing markets, excluding Malaysia, where it has only recently started trading.
Finding growth overseas
In the period under review, Tesco opened three hypermarkets in Europe and five in Asia. It will open 28 hypermarkets in the second half, giving it over 150 hypermarkets by the end of 2002. Indeed, the group will have more space overseas than in the UK by 2003/04, and will create 12,000 jobs overseas by the year end, taking the total employed to over 77,000.
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By GlobalDataIn Europe, all countries were profitable in the first half. Tesco will have over 80 hypermarkets by the end of this year, making it the strongest retailer in the region. In Hungary this year Tesco will open a further three stores, taking the total number of hypermarkets to 26 at the year end. In the first half, sales in Hungary grew by 26%.
In Poland Tesco now has 15 hypermarkets. Total sales in Tesco stores were up 24% in a tough trading environment, and they are on track to make a good profit this year. The acquisition of HIT will give 13 more hypermarkets, two stores under construction and a number of sites all of which are freehold. Tesco expects the HIT acquisition to be earnings neutral for the current year and enhance earnings from 2003/04.
Tesco said Asian operations continue to trade well, and are developing at a slightly faster rate than originally planned. The group already operates 35 hypermarkets in Thailand, and will open six more before the year end. It currently has eight Express stores open with a further two planned.
At home in the UK the highlight of the operation is Tesco.com, the online grocery service. This now has the geographic reach to meet the needs of 95% of the population and generates over 85,000 weekly orders.
Capex at £891m
Group capital expenditure in the first half was £891m (2001: £697m). UK capital expenditure was £530m, including £304m on new stores and £108m on extensions and refits. Total international capital expenditure was £361m including £235m in Asia and £126m in Europe, where Tesco has been steadily expanding its operations. The group puts full-year capital expenditure at approximately £2.1bn.
Meanwhile, net debt at the half year increased by £0.9bn to £4.5bn (February 2002: £3.6bn), with gearing increasing to 78% (February 2002: 64%) reflecting Tesco’s growth program at home and overseas, the company said in a statement.
