City Talk: Tesco - profit of £3.4bn

30 April, 2010
Page 12 

Tesco, the UK's biggest supermarket, announced a group-wide profit of £3.39bn last year up 10.1% from £3.08bn last year. UK profits were lower than the market was expecting. Its US grocery venture, Fresh & Easy, declared a £165m loss.

Trading profit in the UK was £2.4bn over the year to 27 February, which was a little lower than City forecasts. Second-half UK sales rose by 2.7%.

Fresh & Easy is targeting Hispanic customers, who make up one-third of the population in California, to create a niche for itself in western America and increase profits. Fresh & Easy has 145 shops across California, Nevada and Arizona. The Hispanics make up a large part of the community in some of Tesco's catchment areas.

 

 

Asda plans to bypass Tesco

 

 

Asda has announced its plans to overtake Tesco, which holds the number one spot in the UK grocery and non-food retail markets. Asda plans to hit that goal by 2015. Shorter-term, Asda intends to overtake J Sainsbury, the second-largest food retailer, over the next five years. Andy Bond, the outgoing boss of Asda, is not happy with current sales. Asda made annual sales of £19.9bn in 2009, compared with Sainsbury's sales of £20.4bn. In its latest four-week trading statement to 21 March, Asda grew sales by 2.7%, compared with growth of 2.9% at Tesco, 5.8% at Sainsbury's and 7% at Wm Morrison. The overall market rose by 2.6%.

Asda intends to achieve its aim by opening 150 Asda Living non-food only stores inside five years. Currently, Asda has 25 Living stores, and 61% of its total sales in 2009 related to food. Andy Bond is taking a part-time role as chairman of Asda's executive committee.

Dealers speculate that Asda will bid for a major acquisition in an attempt to boost its general merchandise market share and close the gap on Tesco. Owner Wal-Mart has given Asda the go-ahead for such an acquisition and Asda is understood to have looked over Homebase and Argos owner Home Retail.

 

 

More shops forPret A Manger

 

 

 

Sandwich chain Pret A Manger plans to open a record number of shops in 2010, following strong sales growth in its 232 existing stores. Sales have risen by double digits in the first quarter of 2010, following a 2.6% rise in 2009. Total 2009 revenues climbed by 12% to £279m with pre-tax earnings up 11% to £33.6m on the back of strong demand.

 

Pret A Manger is planning to open up 33 new stores in 2010, after 16 were launched in 2009. The company reckons there is room for a further 200 stores to be opened in the UK, while its over-riding strategy is expansion in the US and in airport hubs. The group will open eight stores in the US this year.





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