UK retail giant Tesco has reported a sharp rise in first-half profits, and said it believes it is well placed to meet the challenges of tougher comparisons during the second half.
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The company posted a 24.4% rise in underlying pre-tax profit to £822m (US$1.48bn) for the 24 weeks to 14 August, while pre-tax profit rose 28.0% to £804m.
Sales rose 12.2% to £16.5bn, a rise of 13.7% at constant exchange rates. UK sales rose 11.5% to £13.1bn, while UK like-for-like sales rose 8.3%, including volume of 8.0%.
“These results demonstrate the growing success of the four-part strategy we began seven years ago. I am particularly pleased about the way we’ve done it – this year, we have cut our prices by £5m a week, we are creating 20,000 jobs, our efficiency savings will hit £270m and we are improving returns for shareholders. We are well-placed to meet the challenges of tougher comparisons during the second half,” said chief executive Terry Leahy.
International sales rose 14.9% to £3.4bn, up 23.0% at constant exchange rates. In the rest of Europe, except the UK, sales rose by 11.4% to £1.9bn, a rise of 18.3% at constant exchange rates. In Asia, sales grew by 19.4% to £1.5bn, a rise of 29.2% at constant rates.
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By GlobalDataIn the UK, Tesco said the development of its Value brand continues and the range now extends to over 2,000 products, including non-food items. The company said its Finest range also continues to develop, with 400 new lines launched in the first half and a further 200 planned for Christmas.
By the end of the year Tesco said it will have opened its 100th Extra hypermarket in the UK, having opened the first, at Pitsea, in 1997.
“Even in the current challenging planning environment, we anticipate being able to open up to 20 new Extras a year, mostly through extensions to existing superstores,” the company said.
The company now has over 380 Express convenience stores in the UK, and now expects to hit its target of 500 Express stores this year before Christmas, several months earlier than planned.
