Tesco reports strong profits, though mostly from Asian growth

Despite reporting record profits of £3.8 billion, the bulk of retail giant Tesco’s 12.3% profit increase came from its growing Asian operations. Total group sales were £68 billion and in the UK sales grew 5.5% to £45 billion, with trading profits ahead by 3.8% to £2.5 billion. The supermarket giant, however, saw a 0.7% drop in like-for-like sales in Britain in the fourth quarter as it suffered from poor consumer confidence that is affecting many UK retailers.

Tesco’s new boss Philip Clarke says, “I am pleased with our strong overall performance in the face of some challenging conditions and we are well-positioned, with multiple opportunities to deliver long-term growth and rising returns. We have equipped the business for global growth with new management structures and teams. Asia and Europe made excellent progress contributing nearly 70% of our profit growth in the year. The momentum in the USA is building, but still has some way to go. We didn’t achieve our planned growth in the year and this was only partly attributable to the deterioration in the consumer environment during the second half. We can do better and we are taking action in key areas – for example, to drive a faster rate of product innovation and to improve the sharpness of our communication to customers.”