Tesco sales in Ireland fall by 7.5%

TESCO saw sales in Ireland drop 7.5% to €2.9 billion in the year to the end of February as it took a hit of almost €38 million following price and supplier changes.

Tesco Ireland said a major price reduction programme introduced last May resulted in almost 10% transaction growth and 15% volume growth by the end of the year. It said this indicated a very positive customer response to the reductions.

Trading at the 11 Tesco stores in border areas jumped by an average of 33% year on year.

Tesco Ireland chief executive Tony Keohane said the past year has been an “extremely challenging” one for customers.

“We, like other businesses, have had to respond to these difficulties and adapt our operations and strategy to meet the changed circumstances of our customers,” he said. Mr Keohane added that customers are spending less and are saving around 11% on their weekly shop compared with a year ago.

Tesco said own label product sales increased from 32.5% of total sales to 35%. It said alcohol sales declined marginally. “The market has steadied but uncertainty around consumer confidence and spending persists. Trading continues to be intensely competitive,” added Mr Kohane. Tesco said there should only be “limited disruption’” to suppliers because of ash cloud-related travel chaos.

On a group level it announced a 10% increase in annual pre-tax profits to £3.1bn (€3.6bn). It does not reveal profits for Ireland.

Meanwhile, Pennys, which trades as Primark in Britain, reported profits up 18% to £144m in the past six months.

According to its owners Associated British Foods (ABF), Primark’s revenue increased by 19% to £1,263m.

ABF chief executive George Weston said: “Trading was strong throughout the first half and well ahead of our expectations.”

At the end of February, Primark was operating from 196 stores. Since last year end it opened five new stores, two in Britain and one each in Germany, Portugal and Belgium.

It also reopened its store in Waterford following a “substantial extension”. It expects to open a further six stores in the second half of the year, three in Spain and three in Britain.

In February it acquired a 220,000 sq ft freehold warehouse in Naas to replace a leased warehouse of similar capacity. The company said there has been continued investment in new stores, especially in Spain, which it said performed strongly this half year.

The statement also noted that Arthur Ryan accepted a lifetime achievement award, as voted for by a panel of senior British retailers, in recognition of his 40 years as Primark chief executive, “where his influence continues in his role as chairman”.