Retail giant Tesco has announced record results for the 2007/08 financial year, flying in the face of the economic slowdown with an underlying profit before tax increase of 10 per cent to £3.1bn (€3.5bn) and group sales of £59.4bn (€67bn), up 15.1 per cent.
Results were boosted in particular by a good international performance (excluding the US), helped in part by favourable exchange rate movements during the year. These markets contributed 51 per cent of the growth in overall group sales.
Total international sales jumped 30.6 per cent through 2007/08 to £17.9bn (€20.2bn), with Asian sales in particular accelerating in the second half for a yearly growth total of 29.4 per cent.
In its core UK market, the group reported a like-for-like sales increase of 3 per cent (excluding petrol), with overall sales up 9.5 per cent to £41.5bn (€46.9bn).
Europe (excluding the UK) delivered 'solid growth' through the year, with sales up 29.1 per cent despite the weakening consumer demand in non-food and deteriorating trading conditions in several markets.
'At a time when customers everywhere are feeling the economic strain, we are responding to their changing needs in all our markets by lowering prices, introducing more affordable products and offering even sharper promotions,' said Tesco CEO Sir Terry Leahy. 'These actions, combined with out core strengths – in selling food and everyday essentials, owning our own property and having a broad business base – are helping us to cope with the effects of the downturn.
'As a result, we have delivered solid sales and profit performance, both in the UK and internationally, whilst continuing to invest in our long-term strategy for growth,' Mr Leahy added. 'We have made a good start to the financial year and I am confident Tesco will continue to make good progress even in the current global economic climate.'
In the US, where the group operates its Fresh & Easy Neighborhood format, sales were recorded at £208m (€234.9m) for the year including like-for-like growth of 30 per cent, although trading losses increased from £62m (€70m) to £142m (€160.3m). This reflected the 'more challenging' trading environment in western US states and the decision to hold back on further expansion in northern California, the group said.
'US trading losses reflect the fact that the US business – which has now been trading for 16 months – has been built with the necessary infrastructure in place from the beginning to support hundreds of stores,' the group said. 'At this stage, it is therefore operating with high overhead costs in relation to the scale of the business, whilst also trading from immature stores.'
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