Tesco profits up 10%

British retailer Tesco has recorded impressive annual profits of 10 percent from last year, a comprehensive increase during a recession, but one that was not wholly unexpected.

The retailer posted net profits of GBP£2.3 billion, from GBP£2.13 billion a year earlier, a 10.1 percent rise. Revenue increased 5.6 percent to GBP£57 billion from GBP£54 billion in the prior financial year, which included one extra week.

Sir Terry Leahy, Tesco's chief executive, told the City that his company had "weathered the storm", and was well placed to profit as the global economy returns to health. Tesco plans to create another 16,000 jobs this year, including 9000 in the UK, as it continues to open new stores.

"Across the Group, we have successfully adapted our cost structures and ranges to help customers save money when they've needed to and treat themselves when they've wanted to," said Leahy.

"Our positions in international markets and non-food meant we faced strong headwinds when the downturn came but it will be these parts of our business which will grow fastest as the recovery strengthens."

Tesco International sales

Throughout Tesco's 4300 global stores, it is estimated that GBP£1.1 billion was spent every week in 2009.

As a result global sales for the last year rose by 6.8 percent to slightly more than GBP£62.5 billion. In the UK, Tesco sold GBP£42.25 billion of goods and services - the equivalent of GBP£80,000 a minute.

Within the UK, comparable sales growth slowed to 2.7 percent in the second half of the year from 3.7 percent in the first half, though Tesco said its relative performance compared to other supermarkets was stronger in the second half.

"With clear signs that our international markets are starting to recover we are planning to resume a faster pace of new space opening in the coming year," the group said

Tesco has been less successful with its 2007 initiative Los Angeles-based Fresh and Easy convenience store chain, which has recorded a loss of GBP£165 million.

Tesco green IT initative - a green giant

To further improve profits and make the business more sustainable Tesco has outlined big plans for a greener future.  Indeed, in 2009 the Times reported that Tesco had initiated a plan to build the first zero-carbon store in the picturesque town of Ramsey in Cambridgeshire.

"We [said] that by 2020 we’d reduce our carbon emissions on a like-for-like basis by 2006 by 50 percent. So that means every shop [will need to reduce its] emissions, whether it be from energy, from lighting, from heating, refrigeration, [or] transportation," explained Mike Yorworth, Group Technology Director of Tesco told Meet the Boss TV.

"We also said we’d reduce our emissions of every case of goods that we shipped by 50 percent. Those are the broad targets, and actually since then we’ve gone further and said that by 2050 we’ll aim to be carbon neutral.

The idea of sustainable consumption is key to any plans Tesco has in providing a greener future, and as Yorworth explains: "We’ve started the Sustainable Consumption Institute with the University of Manchester to help our customers understand and us understand how we can drive towards a more sustainable economy and more sustainable consumption in a world whereby in 30 or 40 years time people will need to live on possibly a fifth of the carbon they use today."

Shares in Tesco dipped 0.2 percent on the London Stock Exchange today, while the main FTSE 100 index stepped higher. The stock is up around two percent since the start of the year.

Click here for the full MeetTheBoss interview with Mike Yorworth, Group Technology Director, Tesco.

Related articles:

Co-op profits up by 85 percent | Walmart - Does bigger always mean better? | Boost for Morrison's

Like this article? Get the RSS feed:

blog comments powered by Disqus