Calls to curb Tesco after record profits

Supermarket giant Tesco today underlined its dominance of the UK’s retail landscape after ringing up record profits of £2.55 billion.

Supermarket giant Tesco today underlined its dominance of the UK’s retail landscape after ringing up record profits of £2.55bn (€3.8bn).

The company, which has 1,500 stores in the UK, increased underlying profits by more than 13% for the year to February 24, despite increasing competition from resurgent rivals Asda and Sainsbury’s.

However,Tesco’s massive profits haul also sparked criticism from groups representing small businesses and environmentalists concerned over the chain’s prominence and the apparent creation of “Tesco towns”.

John Wright, national chairman of the Federation of Small Businesses, said: “Small retailers could compete with the supermarkets if there was a level playing field.”

The Competition Commission is investigating the £95bn (€140.3bn) UK grocery sector after the Office of Fair Trading found evidence to suggest some supermarket chains were using large “land banks” to stop rival retailers opening new outlets.

Tesco has a grocery market share of more than 30% and opened more than two million square feet of sales space in the UK last year.

Friends of the Earth campaigner Vicki Hird also accused the chain of “driving High Street stores out of existence”.

She said: “The time has come to put the brakes on the Tesco juggernaut and curb its power.”

Tesco chief executive Sir Terry Leahy, who has led the Cheshunt based company for 10 years, responded: “Tesco is a big company, we touch on a lot of people’s lives so people are going to have a range of views.

“We listen to the views of the millions of customers for whom Tesco is an important part of their weekly lives. There is a stronger voice out there for Tesco.”

Panmure Gordon analyst Philip Dorgan said the group’s domination was set to continue even if shoppers tighten their belts after three recent interest rate rises.

He said: “Its sales growth is driven from a consistent and sustainable trading platform, which means that its profit growth is much more visible and likely to be resilient to any further tightening of consumer spending.”