Tesco UK store

Tesco has revealed that underlying profit before tax increased by 10.1 per cent for the full year of 2009/10, up to £3.39bn (€3.84bn/US$5.2bn), with group trading profit also climbing by 12.3 per cent to hit £3.4bn (€3.86bn/US$5.19bn).

According to a preliminary financial statement, group sales at the UK-based retail giant increased by 6.8 per cent through the year to £62.5bn (€70.9bn/US$95.4bn), while revenue (excluding VAT) rose 7.1 per cent to £56.9bn (€64.5bn/US$86.9bn).

Net debt was reduced to £7.9bn (€9bn/US$12.1bn), ahead of schedule, Tesco said, while the retailer confirmed that it had opened 7.1m square feet of new store space through the 12-month period, with 72 per cent of that outside of the UK.

'By remaining focused on our strategy Tesco has weathered the economic storm well,' said group CEO Terry Leahy. 'Across the group, we have successfully adapted our cost structure and ranges to help customers save money when they've needed to and treat themselves when they've wanted to. Our positions in international markets and non-food meant we faced strong headwinds when the downturn came but it will be these parts of our business which will grow fastest as the recovery strengthens.'

Domestic sales in the UK improved by 4.2 per cent through the year to hit just over £42bn (€47.6bn), with trading profit in the country up 6.7 per cent to more than £2.4bn (€2.7bn), strong results achieved by investment in availability, service, range and quality, Tesco noted.

In Asia, Tesco reported that it had delivered a strong performance despite 'challenging conditions' in the region, with trading profit up 23.9 per cent at actual exchange rates to £440m (US$672m), boosted by revenue growth of 19.7 per cent to over £9bn (US$13.7bn).

Sales across European operations, including Ireland, Hungary, Poland, Slovakia, Czech Republic and Poland, fell 0.7 per cent on 2008/09 to a shade under £10bn (€11.3bn), contributing to a trading profit drop of 4 per cent to £474m (€538m). Even so, Tesco described its performance in Europe as 'robust', noting that it had made market share gains across Europe by reducing costs, lowering prices and investing in new space.

US Fresh & Easy operations have been making 'good progress' despite prolonged weakness in the economies of California, Nevada and Arizona, the group said, with US sales up 72.7 per cent to £354m (US$540m) but trading profit down 17.9 per cent to a loss of £165m (US$252m).

'Across all parts of our strategy – UK, international, non-food, services – our business is now stronger than it was before the recession,' Mr Leahy added. 'With leaner operations, improved market shares, strategic acquisitions performing well and a strong organic development programme, we're well-placed for sustainable, profitable growth. And with the balance sheet strengthening, we have strong foundations in place for improving returns on capital going forward.'