Tesco stores going strong

TESCO reported a strong performance from its Irish stores yesterday as the retail giant racked up a 19% increase in first-half profits.

The group’s pre-tax profits came in at £908 million (€1.35 billion) for the six months to mid-August. Total sales were 14% ahead at £18.8bn (€26.7bn).

The company declined to give a detailed breakdown of the performance of its Irish operations but said the period had been “good” here, largely thanks to a strong like-for-like performance from existing stores and the addition of extra retail space.

Tesco opened three new Irish stores during the first half in Midleton, Co Cork, Dublin’s Dundrum Town Centre and Carrick-on-Shanon in Co Leitrim. It will open three more, in Shannonbanks and Newcastlewest in Limerick and Clane in Co Kildare. The company did not comment on plans to open further petrol stations to add to its existing seven in Dublin, Maynooth, Tullamore, Killarney and Waterford.

Chief executive Terry Leahy said Tesco had delivered despite a challenging year but warned over the threat of higher oil prices.

“Looking forward, the accumulating effects of rising oil-related costs, both on consumer confidence and on our business, are a cause for concern, but we remain confident that we will make further progress in the second half,” he said.

The company confirmed plans to add 7,500 jobs in Britain between now and February as part of an expansion into non-food retailing.

Core British business sales were up 11% to £14.6bn (€21.6bn), three-quarters of the total, while its operating profits were 19% higher at £801m (€1.18bn). Oil prices meant transport, distribution and other operating costs were £60m (€89) more than expected.

The company also said average prices in its British retail stores dropped by 2% year-on-year in line with its policy of cutting prices to drum up trade. It plans to expand its non-food offering to include a wider range of clothing, consumer electronics, telecommunications and financial services.

Internet sales were up 31% to £401m (€595m), with the company receiving more than 170,000 orders per week.