Philip Clarke CEO Tesco

Philip Clark, Tesco CEO

UK-based retail giant Tesco has announced in a press release a 12.3 per cent rise in underlying profit (before tax) to a record £3.8bn (€4.3bn, US$6.2bn) for 2010/11.

Group sales at the global supermarket operator also grew by 8.1 per cent against the previous year to £67.6bn (€77bn, US$110bn), chief executive Philip Clark said.

During the 52 weeks ended 26 February 2011, the group’s trading profit increased by 7.8 per cent to £3.7bn (€4.2bn, US$6.02bn).

That figure included a 30 per cent growth in Asia to £570m (€650m, US$927m), compared with 3.8 per cent growth in the UK to £2.5bn (€2.9bn, US$4bn).

Mr Clark revealed that Tesco did not achieve its planned growth in the UK, claiming it was only partly attributable to the deterioration in the consumer environment during the second half.

“We can do better and we are taking action in key areas – for example, to drive a faster rate of product innovation and to improve the sharpness of our communication to customers,” he explained.

But overall, Mr Clark said Tesco’s businesses have had a “strong year” with improvements in sales, profits and returns, especially in Asia, but admitted that countries hardest hit in the downturn – in particular Hungary, Ireland and the western US – have been slower to recover.

In Asia and Europe, he said that the company has made “excellent progress”, contributing nearly 70 per cent of the profit growth in the year, but noted that while momentum in the US is building it still has “some way to go”.

“Asian markets offer an exciting long-term growth opportunity and will be a key focus for our future international expansion, both in our established markets and in China,” Mr Clark explained.

“`US` losses in Fresh & Easy increased in the year `…` a consequence of the initial costs of integrating our acquisitions of two dedicated fresh food suppliers, 2 Sisters and Wild Rocket Foods, and exchange rate movements.

“We expect losses `in the US` to reduce sharply in the current year as strong growth in like-for-like sales continues and improved store operating ratios start to deliver individual shop-door profitability. Despite the higher losses in 2010/11, the overall business remains on-track to break-even towards the end of the 2012/13 financial year.”

With new management structures and teams – including an experienced UK Board– Mr Clark claimed that Tesco has equipped its business for global growth.

As part of its six immediate objectives, Tesco said it now plans to keep the UK “strong and growing” while working on becoming not just successful but “outstanding internationally”.

Thirdly, as the combination of stores and online becomes compelling for customers, Tesco said it aims to become a multi-channel retailer wherever it trades, as well as offer customers even more value and increase the competitive advantage to the businesses.