Tesco H1 Profits Up 19%, Derides Wal-Mart's Wails

22 September 2005

Tesco, the UK's largest supermarket chain with almost 1,800 British outlets - its extensive overseas businesses generate only twenty per cent of its revenues - has again bettered analysts' forecasts with a barnstorming 18.7% increase in first half profits.

In the six months to June 30, the household goods and foods giant bucked the nation's declining retail trend, posting pretax profits of £908 million ($1.64bn; €1.35bn) on sales up 14% to £18.8 billion.

Despite this ebullient performance, shares slipped slightly from £3.265 to £3.135, after ceo Sir Terry Leahy warned that margins could be hit by the continuing rise in oil prices. Nonetheless, Tesco is adhering to its like-for-like sales growth target of between 3% and 4% for the full year.

Fingers numb from counting his performance-related bonus, Leahy turned his attention to Wal-Mart, whose UK arm Asda (market share 16.7%) is continuing to feel the heat of trying to catch Tesco (market share 30.5%).

Referring to Wal-Mart's recent call on the UK government to investigate Tesco's domination of the national supermarket sector [WAMN: 30-Aug-05], Leahy declared the demand had "brought a wry smile to my face".

With obvious relish, he noted the irony of "the world's biggest retailer appealing to the referee ... Wal-Mart are well able to look after themselves."

According to Wal-Mart president/ceo Lee Scott, the UK government has a duty to act if any chain takes more than 30% cent of the market - a view apparently not shared by the Blair administration. Or Tesco.

Data sourced from MediaGuardian.co.uk; additional content by WARC staff