Leading retailer Tesco has announced its results for the year-long period to February 2012, with full-year group profits and sales both increasing despite a profit slump in its core UK market.
According to the group, UK trading profits fell by 1 per cent for the 12-month period to £2.5bn (€3bn), despite growth in yearly like-for-like sales of 2.8 per cent, although the final quarter of the fiscal year saw like-for-like sales drop 1.6 per cent.
However, the group's overall performance was more positive, with profit before tax up 5.3 per cent to £3.8bn (€4.6bn), helped by year-on-year sales growth of 7.4 per cent to £72bn (€87.3bn).
This was driven by Tesco's international performance, including Asia, Europe and the US, where sales climbed 9.5 per cent at actual exchange rates to £23.6bn (€28.6bn). While Asia in particular performed well, the group's Fresh & Easy operation in the US turned in a trading loss of £153m (US$244m) – actually an improvement of 17 per cent on the previous year.
Chief executive Philip Clarke acknowledged the retailer's disappointing performance in its home market, and outlined a major investment that the group is making to improve its UK fortunes.
'Whilst our International business is delivering excellent growth, contributing £1.1bn of profit to the Group, we fully recognise that we need to raise our game in the UK,' said Clarke. 'As a result, we are committingover £1bn to make the UK shopping trip better for customers: morestaff giving improved service in-store; refreshed stores that are better and easier places to shop; lower prices and even more value from an improved product range. As we improve the shopping trip for our customers, it will follow that our sales growth and financial performance will improve too.
'These are decisive steps and this cost investment – as we have already announced – will constrain our near-term profitability,' Clarke added. 'We are also focusing our lower overall capital expenditure more into our existing stores and in building our online businesses. We are adapting our UK capital plans so that we have the right store base for the future, to underpin the returns that create long term value for our shareholders. Together these steps are the right things to do both to improve the shopping trip for customers and to secure a return to profitable growth in the UK.'
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