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September 20, 2005
Tesco creates jobs as profits soar
Supermarket retailer Tesco is creating 7,500 new jobs after pre-tax profits increased by 18.7% to £908m, in the 24 weeks to 13 August. The record figure beat economist’s forecasts of £886m. Tesco’s sales rose by 14.1% to £18.8bn, with UK same-store sales up 8.2%.
Tesco's share of the grocery market has grown to approximately 30.5% from 28.1% a year ago, according to research group TNS. Overseas sales are growing, but around 80% of revenue is still generated at home.
While the slowdown in UK consumer spending has had little impact on Tesco, soaring oil prices have contributed to higher costs. The company warned that oil-related costs could be up to £60m above budget this year.
Tesco is continuing to benefit from its strategy to add non-food ranges, including clothing, home entertainment and mobile phones, which have helped it gain market share from other High Street retailers.
Home entertainment sales increased by 17% in the first half, consumer electronics by 20% and health and beauty products by 11%. At the start of the second quarter, UK like-for-like sales were 7.6% higher - 6.6% excluding petrol sales.
Tesco’s dominance of the UK market has been widely criticised. Friends of the Earth has called on the UK Competition Commission to investigate the company’s position, claiming its practices have put many UK farmers out of business and also created problems for overseas suppliers.
The Forum of Private Business (FPB) has expressed concern that Tesco’s success is achieved at the expense of small firms.
Posted by at September 20, 2005 07:06 PM
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