Tesco has reported a 23.5 per cent drop in profits during the first half of its financial year.
Pre-tax profits in the six months to 24 August were £1.39 billion, with UK trading profit up 1.5 per cent to £1.13bn.
UK like-for-like sales - which do not include the impact of new stores - fell by 0.5 per cent, while profits in Europe fell 67 per cent to £55 million.
Tesco said it had seen a challenging retail environment on the continent.
David Gray, retail analyst, said: “As expected, Tesco reported a drop in UK like-for-like sales driven by subdued general merchandise sales – which are continuing to suffer - albeit like-for-like sales showed improvement in the second quarter.'
But, he added: 'Nevertheless, food sales held up, fuelled by warm weather in July and August alongside a new food-focused ‘Love Every Mouthful’ marketing campaign which launched during the half. We expect to see further positive news on food sales in the months ahead as improvements to product ranges come through.
“We are also encouraged by moves to address the out-of-town space issue through the integration of recently acquired businesses, like Harris+Hoole, Giraffe and Euphorium, at flagship stores such as Tesco Extra in Watford, Hertfordshire. We envisage further such trials in the months ahead.'
Tesco's chief executive, Philip Clarke, said the supermarket chain was making progress and strengthening its UK business, but added that he saw little improvement in consumers' spending power.
Sainsbury's, meanwhile, reported a two per cent rise in like-for-like sales during the second quarter of its financial year.
The supermarket's chief executive, Justin King, said Sainsbury's was the only major supermarket increasing its market share.
'Our groceries online business grew by over 15 per cent in the quarter, and is now worth over £1 billion in annual sales.' he said.
'Our convenience business grew 20 per cent year-on-year as customers topped up more frequently during the warm summer weather.'
No comments yet