Tesco makes £3.8bn despite UK slump

Supermarket giant Tesco revealed a fourth-quarter sales slump today as it admitted it missed UK growth targets.

The group said UK like-for-like sales excluding VAT and fuel fell 0.7 per cent in the three months to February 26 - leaving overall sales flat over the financial year as it struggled to combat tough consumer spending conditions.

But a better performance overseas helped the group notch up another year of record annual underlying profits, up 12.3 per cent to £3.8bn.

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The UK’s biggest supermarket chain said record petrol prices and Government austerity measures had hit shoppers hard, but added that it had failed to keep up with the wider market in areas such as non-food.

UK general merchandise sales dropped 3.3 per cent in the second half as it underperformed in clothing and electricals.

The group said: “We didn’t achieve our planned growth in the year and this was only partly attributable to the deterioration in the consumer environment during the second half.

“We can do better and we are taking action in key areas - for example, to drive a faster rate of product innovation and to improve the sharpness of our communication to customers.”

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Today’s sales results mark a tough debut for new chief executive Philip Clarke, who took on the top job from Sir Terry Leahy last month.

He outlined a six-point plan for the year ahead, including a priority in the UK to improve its non-food sales performance.

However, Tesco gave little hope that retail conditions in the UK would improve this year.

It said trading would remain challenging, particularly on non-essential items, as consumers tighten their belts.

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