Recession poses few obstacles for grocery chain

Oct 7 2009 by Iain Laing, The Journal

THE UK's largest grocer maintained it is successfully tackling “the challenges of recession” as it reported half- year profits nudged up 1.5% to £1.4bn.

Tesco saw total UK sales including VAT and petrol climb 2.8% to £20.7bn in the six months to August 29 as the supermarket giant continued to add to its store base.

Like-for-like sales rose 2.7% in the UK – or 3.7% excluding VAT – although these slowed in the second quarter as food inflation eased.

The firm has seen its dominant market share position come under attack from rivals in recent months, with slower sales growth than some competitors.

However, Tesco said recent moves to enhance its Clubcard customer reward strategy were paying off, adding it had seen a “significant improvement“ in its performance compared with its competitors.

Tesco has looked to grow the business in new directions as it works to maintain growth in the face of a mature UK grocery market.

Chief executive Sir Terry Leahy said: “Last year’s acquisitions – Homever in Korea and Tesco Bank – are already making good contributions to sales and profits.”