Tesco profits up 10%

Supermarket giant Tesco today unveiled a 10.1% rise in annual profits to a record £3.4bn (€3.86bn).

Supermarket giant Tesco today unveiled a 10.1% rise in annual profits to a record £3.4bn (€3.86bn).

The result came despite slowing UK sales growth in the year to February 27 amid tougher competition and easing food inflation.

Chief executive Terry Leahy said the retailer – which plans to create 9,000 UK jobs this year – “had weathered the economic storm well”.

UK like-for-like sales growth for the overall year slowed to 3.2%, but Tesco - which claims nearly a third of the market - fought back against ``big four'' rivals Sainsbury's, Asda and Morrisons with promotions on its Clubcard loyalty scheme.

Finance director Lawrie McIlwee said consumer confidence was “improving” although there was uncertainty around the outcome of the general election.

He predicted a “slow and steady” pull out of recession for the UK, adding: “There is a huge deficit out there and there will be tightening. Our job is to make sure we do the best job for our customers.”

The group’s non-food business generated £9bn (€10.25bn) in UK revenues after steadily improving sales over the year.

The business now sells one in every six microwaves in the UK as well as one in four small screen televisions, while toy sales were up 25% year on year helped by the collapse of retailers such as Woolworths.

Clothing sales meanwhile reached £1bn (€1.13bn) for the first time, and the group is expanding its Florence & Fred range to target teenagers for the first time.

Mr McIlwee also shrugged off Asda chief executive Andy Bond’s ambition to become the biggest player in non-food within five years in a presentation to analysts last week.

“The previous bloke said that and the bloke before him said that as well,” he added.

While the majority of Tesco’s sales are in the UK, international sales accounted for £17.5bn (€19.9bn) of its £56.9bn (€64.8bn) annual revenues.

The retailer expects non-food and international sales to grow fastest in the recovery, although the group recorded a £165m (€188m) trading loss at its fledgling US business, where losses should have now peaked.

Its banking arm, which has more than six million customers, saw trading profits up 13% to £250m (€284m) and performed strongly in a “challenging” retail banking market.

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