Tag: Tesco

Tesco profit soars in first half

Tesco has reported a big increase in profit for the first half of its financial year as shoppers switched from “premium retailers”.

Adjusted operating profit for the six months to August was up 13.5% to £1.48bn compared to the same period a year earlier, the UK’s biggest supermarket chain said on Wednesday.

Group sales, excluding VAT and fuel, grew by 8.9% to £30.75bn, with like-for-like sales at Tesco’s UK supermarkets up 8.7%.

Chief executive Ken Murphy said: “We know how challenging it is for many households across the country, as they continue to grapple with ongoing cost of living pressures. We are committed to doing everything we can to drive down food bills and Tesco is now consistently the cheapest full-line grocer.”

Murphy added that investments in value and quality have led to market share gains in store and online.

“We’re seeing the results at both ends of the basket, with strong growth in our Finest range as shoppers look to save by treating themselves at home, voting with their feet as they switch from premium retailers to Tesco.”

Food inflation fell across the six-month period and Tesco expects that trend to continue in the second half of the year.

The company has raised its profit guidance for the full year to a range of £2.6bn to £2.7bn.

Tesco maintains profit forecast after rise in Christmas sales

Tesco has confirmed its earlier guidance for full-year operating profit of between £2.4bn and £2.5bn after seeing good growth in sales over Christmas.

Like-for-like sales at its UK stores were up 7.2% as consumers stocked up for the festive period. Although the sales growth was driven by rising prices rather than people buying more, the supermarket chain said in a trading statement that there was strong demand for budget items as well as its more expensive Finest range.

For the third quarter and Christmas combined — the 19 weeks ended 7 January 2023 — like-for-like sales at Tesco’s UK stores were up 5.3% compared with the same period a year ago.

The retailer maintained its leading share of the market at 27.5% and said it was the only major supermarket to grow its market share versus pre-pandemic levels.

It comes as soaring costs for food and energy continue to put pressure on household budgets.

Tesco chief executive Ken Murphy, quoted by Sky News, said he “thinks and hopes” that food inflation, which reached a record high in December, will start to ease in the second half of the year.

There was a mixed reaction from investors this morning to Tesco’s earnings report, according to Joshua Raymond, director at online investment platform XTB.com.

“The food retailer kept its full-year guidance unchanged with operating profit expected to come in around £2.45bn, so there was a lack of any positive surprises in the report,” Raymond said.

“Moreover, its sales growth was in line with similar rises at rivals such as Sainsbury’s and broadly in line with similar growth patterns in previous periods. So with that in mind, there’s not really much in the report to get investors overly excited and as such it’s no surprise to see a mixed reaction.

“Shares initially opened lower before trading back towards flat on the day and have been on an upward trajectory over the past three months, rising back towards 242p having hit a six-year low in October last year. For now, a somewhat boring trading update is probably welcome news for long-term investors.”

Tesco sees profit dip as customers tighten their belts

Tesco has reported a 10% drop in operating profit to £1.25bn for the first half of the year as shoppers look for ways to make their money go further.

Group sales for the six months to the end of August were up 3.5% at constant rates, with Tesco reporting sales growth across all segments following on from a strong performance throughout the pandemic.

The UK’s biggest supermarket chain said that customers were switching to cheaper own label products and from fresh to frozen food, and buying fewer non-food products. People are also shopping more frequently, with smaller basket sizes and shopping online less.

Tesco warned that its earnings for the full year would be at the lower end of earlier guidance. It now expects full-year adjusted operating profit to be between £2.4bn and £2.5bn.

Cost inflation remains significant in the second half of the year, said chief executive Ken Murphy, adding that it is “too early to predict how customers will adapt to ongoing changes in the market”.

Tesco faces competition from discounters such as Aldi and Lidl, which have seen customer numbers rise over the past few months.

The cost of living is increasing at its fastest rate for nearly 40 years, driven by rising prices for food and energy.

Murphy said that Tesco is putting up prices “a little bit less and a little bit later” than its competitors as household budgets are squeezed.

The retailer will also freeze prices on more than 1,000 everyday products until next year.

Aldi joins ‘big four’ as UK shoppers look to save money

Aldi has overtaken Morrisons to become the fourth-biggest supermarket in the UK.

Research firm Kantar said that as living costs rise, consumers are shopping around by visiting more stores and this is benefiting the discounters.

In the 12 weeks to 4 September 2022 Aldi’s sales rose by 18.7% and the chain reached a market share of 9.3%, making it the country’s fourth largest supermarket for the first time. Meanwhile Lidl saw its sales grow by 20.9% and its market share increased to 7.1%.

A decade ago, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three-quarters of the sector but that traditional “big four” is no more, said Kantar’s head of retail and consumer insight, Fraser McKevitt.

Tesco is still well ahead of its rivals with a market share of 26.9% after a 1.9% boost to sales, while Sainsbury’s is in second place with 14.6% of the market followed by Asda on 14.1%.

Morrisons, now in fifth place, holds 9.1% of the market.

Kantar’s data also revealed that grocery price inflation hit 12.4% in August, a new record. It means that the average annual grocery bill will increase by £572 if shoppers don’t make changes to what they buy and how they shop to cut costs.

UK inflation reached a four-decade high of 10.1% in July and the Bank of England has said that it expects the UK to fall into recession at the end of this year, continuing until early 2024.

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.