Tesco doubles six-month profit

Tesco says it has “outperformed” the grocery sector, with first-half sales and profit ahead of expectations.

Britain’s biggest supermarket chain recorded sales of £27.3bn for the six months to August, a rise of 2.6% compared to the same period last year.

UK like-for-like sales were up 1.2%, although Tesco said that some of the recent sales growth was likely to “fall away” in the coming months.

Half-year profit before tax doubled to £1.1bn from £551m a year ago, boosted by a reduction in pandemic-related costs.

The company said that its supply chain had demonstrated “resilience” despite lorry driver shortages, and product availability in stores remained good.

Chief executive Ken Murphy told journalists on a conference call that there will be “bumps in the road” in the run-up to Christmas but overall the company is “in good shape” for the crucial festive period, BBC News reported.

Based on its strong first-half performance, Tesco has increased its full-year outlook and now expects operating profit for the year of between £2.5bn and £2.6bn — up from an earlier forecast of £2.3bn.

Tesco is the UK grocery market leader with a market share of 27%.

Tesco creates 16,000 jobs to support online growth

Tesco has announced that it will create 16,000 new permanent roles to meet the increased demand for online grocery shopping.

Britain’s biggest supermarket chain is planning to hire 10,000 pickers to assemble customer orders and 3,000 drivers to deliver them, plus a variety of other roles in stores and distribution centres.

This is in addition to the 4,000 permanent jobs already created at Tesco since the start of the coronavirus outbreak.

The retailer expects the majority of the new positions to be filled by staff who joined the company on a temporary basis in recent months. Roles will first be offered to these temporary employees, with remaining vacancies then recruited externally.

Food retailers remained open throughout the lockdown and saw considerable growth in online demand as many customers stayed at home.

Before the Covid-19 pandemic around 9% of Tesco’s sales were online, a figure that has now risen to more than 16%. Tesco expects its online sales to exceed £5.5bn this year, up from £3.3bn last year.

In April, the first full month of lockdown, Tesco became the first retailer in the UK to fulfil one million online grocery orders in a week and the supermarket is now serving nearly 1.5 million customers a week online, up from around 600,000 at the start of the outbreak.

Tesco said that the number of new jobs may increase further in the coming months as its online business continues to grow.

Tesco agrees to sell US arm to investment group Yucaipa

UK retailer Tesco Plc (LON:TSCO) said it had agreed to sell US grocery arm Fresh & Easy Neighborhood Market Inc to YFE Holdings Inc, part of investment firm Yucaipa Companies LLC, in a move to exit the US market.

The sale covers over 150 stores as well as Fresh & Easy’s Riverside distribution and production facilities and includes over 4,000 staff, with stores excluded from the deal to be shut down in the next weeks, Tesco said.

The offload, reflecting the UK firm’s focus on markets with considerable growth potential, is seen to be finalised within three months, pending legal and regulatory clearances.

As part of the transaction, Tesco will be issued warrants for up to a 32.5% stake in YFE Holdings Inc.

The UK company will also extend a loan of some GBP80m (USD125.8m/EUR94.9m) to the new business, covered by the Riverside Campus facility, it said.

The assets included in the sale had a gross value of GBP229.3m as of 23 February 2013 and generated net losses before tax of GBP163.4m in the year to that date

Tesco to pull out of US market

UK supermarket group Tesco plc (LSE:TSCO) is to exit from the United States, the company announced today.

The Fresh & Easy venture was launched in Nevada, California and Arizona in 2007 but has consistently made a loss in recent years and Tesco started a strategic review of the business in December 2012. The company has now written down the assets of its US business and booked a provision for ongoing liabilities. The total impact to profit after tax is GBP1.2bn, including a GBP1bn writedown on assets and GBP169m of trading losses in the last year.

Chief executive Philip Clarke told the BBC that the plans to withdraw from the US were “well-advanced” and there was interest from potential buyers for all or parts of the business. The sale process is anticipated to be concluded in about three months’ time.

Tesco has also exited from its Japan operations as of the start of 2013 and said today that it is taking “a more measured approach to our growth in China.”

Meanwhile, in its home market Tesco has recorded a property write-down of GBP804m after a review of its UK property portfolio identified more than 100 sites that the company no longer plans to develop. Most of these sites were purchased during the property boom between five and ten years ago.

Overall, Tesco reported pre-tax profit of GBP1.96bn for the 52 weeks to 23 February 2013, down 51.5% year-on-year. Including the US writedown Tesco made a profit of just GBP120m after tax, compared to GBP2.8bn last year. The company has maintained its full-year dividend at GBP0.1476 per share.

Group sales for the year rose 1.3% to GBP72.36bn. In the UK market total sales grew 1.8% to just over GBP48bn, although UK trading profit declined by 8.3% to GBP2.27bn after a significant investment in improving the business.

UK sales excluding fuel and VAT for the fourth quarter of the financial year rose just 0.5%, a slowdown from growth of 1.8% in the six weeks to 5 January, when the company saw strong Christmas trading.

Tesco pays £49m for acquisition of Giraffe chain

UK retailer Tesco Plc (LON:TSCO) said on Wednesday it had taken over restaurant chain operator Giraffe Concepts Ltd for £48.6m ($72.7m/€55.9m).

The company has acquired the stakes held by Giraffe’s founders Juliette Joffe, Russel Joffe and Andrew Jacobs along with shares from Risk Capital Partners and 3i Group Plc (LON:III). The founders will continue to be actively engaged in the day-to-day management of the business.

The takeover aligns with Tesco’s plan to develop some of the space in its bigger stores to establish retail destinations that offer more choice to clients, it said.

In 1998, the acquired group opened its first site in North London. It now comprises 48 locations, including a franchised site in Dubai.

Tesco’s Turkish unit in talks to acquire a controlling stake in local grocer Uyum Gida

Tesco Kipa Kitle Pazarlama Ticaret ve Gida Sanayi AS (IST:KIPA), the Turkish subsidiary of British retailer Tesco Plc (LON:TSCO), is in preliminary discussions about buying a majority stake in Turkish grocer Uyum Gida ve Ihtiyac Maddeleri Sanayi VE Ticaret AS (IST:UYUM), the buyer said in a statement to the Istanbul Stock Exchange.

At the end of September, the target had 55 stores in the Marmara region of Turkey, most of which are located in Istanbul.

The announcement comes after in June 2011 Tesco Kipa’s CEO Paul Ritchie told Reuters that his company would look into acquisition opportunities when they emerged. Later, Uyum Gida unveiled a one-year confidentiality agreement with a foreign investment fund to consider options for the company. In July 2012 Turkish daily Vatan reported that the British retailer was interested in acquiring a majority stake in Uyum Gida, adding that Tesco was the main suitor for the Turkish firm.

Tesco made its first step into the Turkish market in 2003 when it bought five Kipa stores. At present it has 181 stores in 24 Turkish cities including Istanbul, Ankara and Izmir. Tesco Kipa generated revenues of GBP693m (USD1.1m/EUR863.4m) in fiscal 2011/12.

Founded in 1919, Tesco currently operates in 14 countries across Europe, Asia and North America, with over 500,000 employees. It engages in retailing books, clothing, electronics, furniture, petrol and software, as well as in providing financial services, telecoms and Internet services, DVD rental and music downloads.

Tesco unveils virtual supermarket at Gatwick Airport

UK-based supermarket chain Tesco plc (LSE:TSCO) has opened a “virtual grocery store” in a two-week trial at London’s Gatwick Airport.

The company said today that the new store would allow holidaymakers to arrange an online grocery shop that can be delivered when they return.

From now until 19 August, the trial store in the airport’s North Terminal allows customers to view a range of everyday products by scrolling through screens on large virtual fridges. They can add products to an online basket by scanning the barcodes with their smartphones and then book a home delivery slot and checkout.

Surveys show that more than half of the UK population owns a smartphone.

Around 80 of the most popular products are available in the virtual supermarket, including milk, eggs, bread, cheese, pasta, sauce, cereal and fruit and vegetables.

Customers need to download the Tesco app to scan the barcodes. The software works with iPhones and devices powered by Android.

According to Tesco, 30,000 people depart from Gatwick’s North Terminal every day and each has an average of 70 minutes of time to spare while waiting for flights. With the opening of the virtual Tesco store, they can now use this time to stock up on essentials and ensure they don’t have to visit the shops on their way home.

This is the UK’s first interactive virtual grocery store and its opening follows Tesco’s launch of a virtual store in South Korea last year, allowing commuters to order groceries in subways and at bus stops by pointing their mobile phones at billboards.

Tesco to exit Japan via two-stage sale to domestic player Aeon

British retailer Tesco Plc (LON:TSCO) said on Monday it would sell 50% in its Japanese business to domestic sector player Aeon Co Ltd (TYO:8267) as part of a planned two-stage exit from this market.

Tesco said it would get a nominal price for the stake in Tesco Japan and will then create a joint venture with Aeon. Under the terms of the JV, the British supermarket giant would invest some GBP40m (USD63m/EUR49.4m) as a partner to fund additional restructuring at the business. After this move, Tesco would have no further financial exposure to the Japanese business or its operations, it said.

Tesco’s CEO, Philip Clarke, welcomed the transaction in a comment saying it would provide the best outcome for employees, Japanese customers and the group’s shareholders.

The British group, which unveiled plans to shed its Japanese business in 2001, said the completion of the deal is pending regulatory clearance.

Tesco Japan is made of 117 Tsurakame, Tesco and Tesco Express small stores located in the greater Tokyo area.

UK’s Tesco stepped into Japan in 2003 when it bought C2 Network, operating the Tsurakame branded stores.

Aeon runs more than 1,200 supermarkets in Japan. The group has 12 core retail businesses, which, apart from the supermarket operations, also include a general merchandise store business and strategic small size store business.

Tesco sales down again in UK market

UK-based supermarket retailer Tesco plc (LSE:TSCO) announced today a further decrease in quarterly sales in its home market.

The retail giant said that like-for-like sales in the UK, excluding petrol and VAT, declined by 1.5% in its first quarter ended 26 May 2012, compared with the same period last year.

Overall, Tesco’s group sales in the 13 weeks increased by 2.2% and the company said that it had performed “robustly” in the first quarter despite subdued consumer confidence in all of its markets.

Chief executive Philip Clarke confirmed that the retailer is focusing on the implementation of its six-point plan to revive its fortunes in the UK grocery sector, noting that the company has recently put extra staff into 700 of its stores and relaunched the Everyday Value range.

Tesco announced earlier this year that it would invest GBP1bn to improve the shopping trip for customers and lift results in its UK operations. So far a total of 4,300 additional new staff have been recruited and trained and they are working in fresh food and Beers, Wines & Spirits departments in every Extra and Superstore. In addition, more than 145,000 staff have been given specialist training relevant to their department.

According to Tesco the UK market remained very competitive in the quarter, with a significant amount of couponing activity. Nevertheless, directly after the quarter ended, in the run up to the Diamond Jubilee, Tesco recorded its biggest ever week outside the Christmas period with sales exceeding GBP1bn.

Further afield, the retailer saw continued growth in market share in 11 of its 12 international markets during its first quarter. At constant exchange rates, total sales grew by 9.1% in Asia and by 6.0% in Europe.

Tesco is currently performing in line with market expectations and the retailer’s outlook for the year as a whole remains unchanged.

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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.