Supermarket giant Tesco reports declining profits in home market

UK-based supermarket retailer Tesco plc (LSE:TSCO) announced today an increase in group profit for the year to 25 February 2012 but a decrease in profit generated in its home market.

Pre-tax profit for the 12-month period rose 5.3% to GBP3.8bn. In the UK Tesco’s profit fell 1.0% to GBP2.5bn, while its international operations recorded profit of GBP1.1bn, up 17.7% compared with the previous year.

Tesco has been working on plans to revive its fortunes in the UK grocery sector and the company announced today that it has committed GBP1bn to improve the shopping trip for customers. This investment will be targeted at recruiting more store staff, speeding up store updates to bring a warmer look and feel, offering better prices and promotions, re-launching the Tesco brands and offering better ranges, providing clearer and more relevant communication with customers and rolling out its Click & Collect online ordering service.

The company said that it will take on more than 8,000 new staff in existing stores and will create a total of 20,000 net new jobs over a period of two years.

Commenting on the year’s results, chief executive Philip Clarke said, “Whilst our International business is delivering excellent growth, contributing GBP1.1bn of profit to the group, we fully recognise that we need to raise our game in the UK.”

Tesco’s group sales for the year increased by 7.4% to GBP72.0bn, or a 5.9% increase excluding petrol.