Tesco has delivered bumper full-year profits and sales, and has mounted a robust defence of the performance of its fledgling US chain Fresh & Easy.
For the year to February 23, the grocery giant posted underlying pre-tax profit up 11.8 per cent to£2.85 billion and group sales up 11.1 per cent to£51.8 billion.
In the UK, Tesco delivered like-for-like sales up 3.5 per cent, excluding petrol. Total sales jumped 6.7 per cent to£37.9 billion. Trading profit rose 7.1 per cent to£2.05 billion, with trading margins at 5.9 per cent, slightly up on last year.
For the first five weeks of its new financial year, Tesco delivered UK like-for-like sales up 4 per cent, excluding petrol and including price inflation of 1.5 per cent. In a statement, the grocer said: “In the UK, our planned investments in strengthening further our offer for customers, involving our latest round of price cuts and the introduction of stronger promotions – and at the same time continuing to improve availability and service standards – have gone well.”
Tesco’s international sales rocketed 25.3 per cent to£13.8 billion at actual exchange rates.
In the US, the world’s third-largest retailer said it was encouraged by Fresh & Easy’s start. Tesco said: “Sales are ahead of budget and sales densities are already higher than the US supermarket industry average, with our best stores exceeding US$20 per sq ft a week. We are seeing strong growth in the early stores as we step up, as planned, our marketing programmes and build awareness of the brand.
“This is also reflected in the strong sales performance of recent openings in all of our markets in Southern California, Nevada and Arizona. Fresh foods and own-brand products have sold particularly well, confirming that the core of our offer has already gained acceptance with customers.”
Blue Oar analyst Greg Lawless said: “These are solid prelim results again from Tesco. Sales and profits are consistently growing by double-digit increases every year. 50 per cent of the group trading-profit growth came from the international division.
“While the UK market remains challenging, Tesco expects to trade the business harder and remains committed to improving all aspects of the shopping trip – including price.”