Tesco sees strong performance in menswear & childrenswear

06 Oct '10

4 min read

Tesco Plc, one of the world's largest leading retailers, announced Interim Results of 2010/11.

Terry Leahy, Chief Executive, comments:

“The global economic headwinds of the last two years are being replaced by the tailwinds of recovery in most of our markets and this is helping our International businesses to resume strong sales and profit momentum. Our important Asian markets in particular are emerging strongly from recession and we are now benefiting from the substantial investment we continued to commit to the region during the downturn.

In the UK, we have coped very well with subdued demand and modest levels of industry like-for-like growth, helped by excellent productivity, a pleasing performance from new stores and good growth from our Services businesses, particularly online and Tesco Bank. Economic recovery in the UK is slow and steady and I believe our investment in making the shopping trip even better for customers means that Tesco is well-placed to grow in this environment.”

Highlights

• 8.3% increase in Group sales*to £32.9bn
• 9.1% growth in Group trading profit, including 30% growth in Asia
• 14.1% rise in underlying profit before tax
• Underlying diluted EPS growth of 12.3%**; dividend per share growth of 12.3%
• Net debt to reduce to £7.0bn by year-end, ahead of plan; £926m of debt repaid early
• Market share gains and sharply improving like-for-like trends in International markets
• Fresh & Easy sales up 47%; planned to reach profitability during 2012/13
• Opened 2.7m sq ft of net new Group space; 6.4m planned in H2, 73% outside the UK
• Clubcard is increasing customer loyalty – in the UK and Internationally
• £1.2bn of property divestments at very attractive initial yields, below 5%
• We are on track to hit our 2010/11 carbon targets - emissions reduced 8% in Q1
• Plans to create 16,000 jobs this year, including 9,000 in the UK

Group Results

Group sales, including VAT, increased by 8.3% to £32.9bn. At constant exchange rates, sales increased by 6.4% (including petrol) and 5.5% (excluding petrol).

Group trading profit was £1,692m, up 9.1% on the first half last year and Group trading margin, at 5.6%, rose 10 basis points. Underlying profit before tax rose to £1,792m, an increase of 14.1%. On a statutory basis Group operating profit rose by 9.1% to £1,747m. Group profit before tax increased 12.5% to £1,596m. Underlying profit for the first half excludes restructuring costs relating to our activities in Japan and the United States, the closure of our Vin Plus store in France and a further £55m goodwill impairment for our business in Japan.

Second quarter sales performance. In all our regions we saw an improved trading performance in quarter two compared with quarter one. Group sales increased by 8.8%, driven by all parts of our strategy. Total International sales increased by 16.8% at actual exchange rates (10.9% at constant exchange rates) and total UK sales grew by 5.3%, including VAT and petrol.

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