Retail major Tesco to focus more on reviving UK business
LONDON - Global retail giant Tesco PLC Wednesday strived to play down its first fall in the UK profits in 20 years with the announcement to invest 1billion pounds in it operations within the country to revive sales and stamp out investor disquiet.
The supermarket major saw its group trading profits rise 1.3 per cent to 3.8 billion pound with a strong 17 per cent rise in profits from international operations to 1.1 billion pounds. The UK business however witnessed a 1.0 per cent dip to 2.5 billion pounds in 2011-12, the company announced.
"Whilst our International business is delivering excellent growth, contributing 1.1 billion pounds of profit to the Group, we fully recognise that we need to raise our game in the UK. As a result, we are committing over 1 billion pounds to make the UK shopping trip better for customers," said Philip Clarke, Tesco chief executive announcing the preliminary results for 2011-12.
The over 1 billion pounds investment are earmarked to be utilized for improving in-store service, recruit more staff, provide better training, offer better and wider product range, ensure better prices and promotions, and more personalised offers.
"As we improve the shopping trip for our customers, it will follow that our sales growth and financial performance will improve too," Clarke said optimistically.
The chain has 185 stores stateside and the plan is to add 45 more by February 2013. The chain is also planning to add 20,000 people to its UK work force over the next two years, renovate stores and introduce better product ranges to wrest back market share in the supermarkets' price war.
Clarke, who started his career stacking shelves in Tesco, said the retailer has also stepped up the pace of revamping its existing stores to give them warmer colours, better lighting and more attractive signage.
He however warned there will be a 38 per cent reduction in the number of new store space Tesco opens this year, as it reins back big store openings and focuses its efforts on expanding its Express convenience stores and more picking centres to improve its online delivery service.
"We are focusing our lower overall capital expenditure more into our existing stores and in building our online businesses. We are adapting our UK capital plans so that we have the right store base for the future, to underpin the returns that create long term value for our shareholders," Clarke said.
The group saw its market share increase in 10 out of 13 markets, particularly in Europe and Asia. In the US, the company was able to reduce its losses by 17.7 per cent, and expects to remain on track to further cut losses.
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