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Retail

Sharp Fall In Profits At Tesco

By square1
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Sharp Fall In Profits At Tesco

Tesco’s group sales increased by 2% to £35.6 billion in the 26 weeks ending 24 August, new figures show.

However, its pre-tax profits declined by 23.5% to £1.39 billion due largely to a fall in profits on property-related items from £342 million to £45 million.

Group trading profit was down 7.6% £1.59 billion, “reflecting the effects of challenging economic and trading conditions in Europe, in addition to the impact of regulatory restrictions on opening hours in Korea”, the company said in a statement.

In the UK, trading profit was up 1.5% to £1.31 billion, while trading profit was down by 7.4% in Asia and by 67.8% in Europe. Trading profit was also down 6.4% at Tesco Bank.

The board has approved a maintained interim dividend of 4.63% per share.

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"Despite continuing challenges, we have made further progress on our strategic priorities,” said chief executive Philip Clarke. “We are strengthening our UK business, working to establish multichannel leadership and pursuing disciplined international growth. “The challenging retail environment in Europe has continued to affect the performance and profitability of our businesses there. The investments we have made to improve our offer for customers in the region are already starting to take effect and we expect a stronger second half as a result.”

Pointing to Q2 performance positives in the report, the company highlighted their "partnership formed with CRE giving Tesco a 20% stake in China's leading food retailer" and an 8.6% increase in UK clothing sales.

The company also said that sales in Ireland came under pressure as like-for-like sales in the second quarter in traditional stores were down 4.4%.

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