By Geoff Percival
Tesco has reported a 2.7% rise in like-for-like sales at its Irish operations for its latest financial year.
Tesco Ireland generated revenues of just over €2.57bn for the 12 months to the end of February, boosted by a 5.2% increase in fresh food sales and overall sales volumes rising by over 4%.
Ireland counts for around 4% of the British supermarket giant’s total revenues.
Irish sales improved as the year progressed with annualised growth improving by 0.2%, 2%, 3.3% and 5.3% in the respective quarters. Tesco opened two more shops in Ireland during the 12 months, bringing its total number of Irish stores to 150.
Earlier this week, grocery sector figures, from consumer insights agency Kantar Worldpanel, showed Tesco achieved its strongest sales growth, in Ireland, in over six years in the 12 weeks up to March 25 of this year, with a 7.1% year-on-year increase noted.
In total, Irish shoppers spent €2.43bn on groceries during the period.
Tesco now has a 21.9% share of the Irish grocery market, marginally behind Dunnes and SuperValu, each of which control 22.1% of the market.
“Encouraging shoppers to splash out and spend more every time they shop has proved the key to Tesco’s success. Over the past 12 weeks, customers upped their average spend by €1.36 to €26.06,” Kantar’s Douglas Faughnan said this week.
Shares in Tesco rose by over 7% after it reported a 28% surge in group annual profit, underlining chief executive Dave Lewis’ recovery strategy of lower prices and streamlined product range.
It also confirmed its medium-term savings and profit targets and said the integration of wholesaler Booker, purchased for £4bn (€4.6bn) last month, was well underway.
The deal will see Tesco expand to provide food to restaurants, bars and smaller grocers, while some £200m worth of annual synergies are targeted within three years.
Tesco’s results provided some cheer after Britain’s brutal trading conditions plunged Toys R Us UK, electricals group Maplin and drinks wholesaler Conviviality into administration and forced fashion retailer New Look and floor coverings firm Carpetright to close stores.
Tesco remains the largest of Britain’s supermarkets by a clear margin, having a UK market share of 27.6%. It is also the fastest growing of Britain’s “big four” along with fourth largest player Morrisons.
Tesco made an operating profit of £1.64bn in its latest financial year versus guidance of “at least” £1.57bn and £1.28bn made in the previous year.
Group sales rose 2.3% to £51bn.
The outcome was helped by a strong end to the year in its home market, with fourth quarter like-for-like sales up 2.3% — a ninth straight quarter of growth for Tesco in the UK.
Tesco’s shares have risen 13% over the last year and are close to a three-year high. However, they remain below the 230p they were at when Mr Lewis joined in September 2014.
That reflects caution among some investors about the ongoing challenge of the discounters and online players.
“Whilst we take some comfort from what it is we have done, we are very clear that there’s more to do. It’s definitely not job done,” said Mr Lewis.
- Additional reporting Reuters