Further evidence that Tesco is a force of nature equal to any Icelandic volcano, as it reported a whopping 10.1% rise in pre-tax profits to £3.4bn for the year to February 27, 2010.
The latest figures show that Tesco is over the slight wobble in its performance early in the recession, and is now well and truly back on the front foot. Group sales were up almost 7% to £62.5bn and CEO Sir Terry Leahy pledged to create 16,000 more jobs this year. Never one for making rash statements, Leahy even felt confident enough to claim that Tesco had ‘weathered the economic storm’.
As for disruption from that pesky ash cloud (which happened too late to be included in the figures of course), Leahy told the BBC this morning that the firm is maintaining its supplies of Kenyan produce - including tropical fruit and flowers – by flying it to Spain, and trucking it from their to the UK. Perhaps he could ask the Royal Navy rescue flotilla for help – if it ever gets there.
On its home turf, Tesco’s profits were up by 6.2% to £2.41bn – which was broadly in line with analysts’ predictions. Despite the wintry weather, Tesco enjoyed its best Christmas for three years, boasting a 4.9% rise in UK like-for-like sales – which Tesco is putting down to a rise in Clubcard promotions. Toy sales give it a welcome boost too – up 25% year-on-year, helped by the demise of retailers such as Woolies.
But it’s not all good news - sales in continental Europe slid 4%, which the firm is blaming on poor sales in recession hit countries such as Ireland and Hungary, and it has reduced the amount of retail space it plans to open across Europe in the next year to 1.8m sq ft (which still sounds like a lot to us.)
It hasn’t been plain sailing for Tesco on the other side of the Atlantic, either, with the continued travails of loss-making US chain Fresh ‘n’ Easy. Despite an increase in sales of nearly 73%, losses continued to widen – up 18% to £165m.
News of the record profits is not likely to be welcomed by those people who feel that Tesco’s 30% UK market share is too much, or that (as we report in the latest issue of MT) the big stores can be heavy-handed in dealing with small suppliers, but it’s hard to argue with such a bravura performance.
In a week which has seen too many stories about dubious ethics in the finance sector, it’s good too see a straightforward business which everyone can understand trading so well.
In today's bulletin:
Inflation busts 3% as cost of transport soars
10.1% profit eruption as Tesco puts in seismic performance
Primark still looking sharp
IoD calls for £80bn red tape bonfire
MT Expert: How to stay grounded in a growth spurt