Tesco Sees FY Sales Marginally Down Due To Central Europe Transformation
Ongoing work to streamline Tesco's Central European portfolio meant that the retailer posted a 1.0% decline in group sales at constant currency rates in its financial year to 29 February.
The business posted group sales of £56.5 billion (€64.1 billion) for the year.
Tesco's UK and Ireland sales were £44.9 billion (€50.1 billion) for the year, a 0.2% increase at constant rates, while Asia reported £5.2 billion (€5.9 billion) in sales for the period.
Its Central Europe business, where Tesco is selling a number of outlets and streamlining others, posted £5.3 billion (€6.01 billion) in sales, which was a 10.1% decline at constant currency rates.
Tesco reported retail operating profit before exceptional items and amortisation of £2.77 billion, which was up 14.9%. Margin was up 4.4%.
It said that customer satisfaction for the period was 'improved' across all formats, while brand perception improved across range, quality and value.
The group also noted that its proposed sale of its Thailand and Malaysia business is expected to be completed in the second half of this year, and the business is to be treated as discontinued for the coming 2020/21 financial year.
Commenting on the group's performance, outgoing chief executive Dave Lewis said, “Over the last five years we have focused on serving customers better, re-engaging our colleagues, completely resetting our relationships with our suppliers and as a result we have been able to add value for our shareholders.
"These endeavours put us in a strong operational and financial position to deal with the challenges of COVID-19."
On the impact of coronavirus on its business, Tesco said that in the first few weeks of the crisis, it saw 'significant panic buying', with a 30% uplift in sales in its UK operations.
The group is seeking to 'step up' its grocery home shopping capacity, noting that while it has already increased capacity by 20%, 'there is simply not enough capacity to supply the whole market'.
"Initial panic buying has subsided and service levels are returning to normal," said Lewis. "There are significant extra costs in feeding the nation at the moment but these are partially offset by the UK business rates relief.
"Tesco is a business that rises to a challenge and this will be no different. I would like to thank colleagues for their unbelievable commitment and customers for their help and understanding. Together, we can do this.”
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.