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Tesco posts record profits
Supermarket delivers £1bn in six months
Tescos first-half profits have topped £1bn as the supermarket continues to exert its dominance in the UK and overseas markets.
Tesco made £1.152bn for the 26 weeks to 26 August with growth in its four core areas of business.
In the UK, sales were up by 10.2% to £17.4bn with like-for-like growth of 6.5%. Non-food sales increased by 12.6% on a comparable basis. International sales jumped by 21.3% and the grocers online business, Tesco.com, leapt 28.7%.
Total sales at Tesco for the six-month period reached £22.7bn, an increase of 12.7% on the same period last year.
Chief executive, Sir Terry Leahy, said: "Tesco is continuing to deliver strong progress across the group with all four parts of our strategy contributing as more customers vote with their feet and shop with us."
Sir Terry revealed the retailers move into the US market had so far cost it £20m in start-up charges. He said Tesco was on track to open its first stores on the West Coast in 2007. An office has been opened in El Segundo, which now employs 100 staff, and Tesco has acquired land at Riverside on the eastern edge of Los Angeles for its first distribution centre, as well as a number of store sites.
Combined with the launch of Tesco Direct, the catalogue shopping service, costs for the full year should reach £50m, according to Sir Terry.
Tesco Direct offers 8,000 products on-line and initially 1,500 by catalogue, including new categories such as furniture. As well as wider ranges, the service provides customers with the choice of ordering on-line, by phone or in selected stores. Tesco said the early customer response has been very positive with over 1m hits on the website in the first three weeks alone.
Tesco added the performance of its three Homeplus trial non-food only stores has been encouraging. Further trial stores will open shortly in Chelmsford and Staines but no decisions have yet been taken on further expansion for this format.
"With the recent launch of Tesco Direct and the preparations for our entry into the United States in 2007, we are investing into new markets to drive the long term growth of the business, as well as making a good start on our new community plan," Sir Terry said.
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