Fresh & Easy was set up only five years ago and has racked up trading losses of £464m. It will grow from the current network of 165 stores to around 400 by the time it reaches profitability. Tesco is opening two stores a week to meet this target.
This announcement comes on the back of first-half pre-tax profit to 28 August of £1.59bn up 12% from £1.4bn last year. Sales across the group were up 7.1% on last year, excluding VAT, and hit £29.8bn.
Like-for-like sales in the UK rose by only 0.3% over the six months, excluding petrol and adjusting for VAT. Outside the UK, the Asian stores were the big hitters, with total sales up 20.3%, while trading profits grew by 30.3% to £228m. Tesco is still interested in buying the Asian stores that Carrefour is selling.
Sainsbury's outpaces rivals
Sainsbury's revealed better-than-forecast sales figures for the 16 weeks to 2 October. Like-for-like sales, excluding petrol, rose by 2.9% over the second quarter.
Chief executive Justin King reckons Sainsbury's is "clearly" ahead of the other big supermarket chains. The retailer is in the process of opening 1.5m square feet of new store space this year. The chain has recently opened its largest stores in England, Scotland and Wales.
Cranswick strong growth
Cranswick, the meat product group, reported strong sales growth for its first half, with turnover up 8%. CCF Norfolk, which Cranswick bought last year, is making good progress. The extension of Lazenby's sausage facility and the new abattoir at the company's main pork processing site in Hull will both be fully commissioned during October.
The assets of Cranswick's cooked meats facility were transferred to Farmers Boy, a company owned by Morrisons. As a result of the deal, Cranswick has received 49% of the shares in Farmers Boy, which looks to be an astute transaction for Cranswick; robust cash generation mean that debt will fall to substantially below the £54m reported at the end of the first quarter buttressed by the release of cash from the Morrisons deal.
Northern Foods' sales rise
Northern Foods reported faster sales growth in the past three months, with like-for-like sales up 7.1% in its second quarter compared with a 1.6% drop in the first quarter. Sales for the half rose by 3%. The company is cutting 500 management jobs to keep costs down.