Tesco Ireland plans further investment as sales rise

Tesco Ireland has attributed a 0.2% improvement in like-for-like sales for the first half of its financial year and revenues of €1.22bn to improved customer service and product ranges, and has said it will continue to invest in its offering here.
Tesco Ireland plans further investment as sales rise

The performance update is contained in the British supermarket group’s strong interim results presentation. It noted its share of the Irish communications market, via its Tesco Mobile service, has increased to 7% in 2016.

“This is our third successive quarter of positive like-for-like sales and we’re pleased to see strong positive volume growth as a result of our investment in strengthening our customer offer,” said Tesco Ireland chief executive Andrew Yaxley.

“We continue to invest significantly in reducing prices for customers through our ‘Staying Down’ campaign. We’ve also improved the quality of our fresh food produce, simplified our range, and extended our lines of Tesco own-label products.”

Recent figures from consumer insights agency Kantar Worldpanel showed that Tesco’s share of the Irish grocery market had fallen from 22.9% to 21.1% in the past 12 months, with Dunnes Stores now joining it in second place behind SuperValu.

On a group-wide basis, Tesco yesterday reported a 3.3% annualised increase in first-half revenues, for the six months to the end of August, to £24.4bn (€27.7bn), with net debt down by nearly half and operating profits ahead by 38.4% to £515m.

On the back of group chief executive Dave Lewis saying the company will cut costs further and plough the savings back into the business to boost returns over the next three years and the company lifting its performance targets, Tesco’s shares initially rose by over 11% yesterday.

“We are sharing our ambition to deliver a group operating margin of between 3.5% and 4% by our 2019-20 financial year,” said Mr Lewis.

That compares with a figure of 2.18% for the first half of the current 2016-17 year and 1.73% in 2015-16.

“The results... indicate a business moving out of crisis to one that’s showing real confidence in its recovery,” said Mr Lewis, adding that the UK grocery market remains “tough and uncertain”.

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