Supermarket behemoth Tesco has reported its preliminary results for the 52 weeks ending February 26th 2011.
Group sales were up a healthy 8.1 per cent to £67.6 billion, with underlying profit rising 12.3 per cent before tax to £3.8 billion.
"I am pleased with our strong overall performance in the face of some challenging conditions and we are well positioned, with multiple opportunities to deliver long-term growth and rising returns," said Philip Clarke, Tesco's chief executive.
In the UK, general merchandise, clothing and electricals sales grew by 0.4 per cent to £5.3bn. This growth reflected the challenging environment, particularly in the electrical and entertainment categories, and a strong prior year performance.
General merchandise sales growth was also affected by a smaller component of extension selling space in this year’s new space programme, with extensions providing just ten per cent of new space.
Toys, sports, books and magazines and gaming grew well, but Tesco's performance in electrical goods was below the market and the growth in clothing was also not as strong as planned. Like-for-like growth across the whole of general merchandise, clothing & electricals was (3.3) per cent during the second half, compared with (0.3) per cent in the first half. Improving the performance of these categories in the UK is now a priority. Tesco has strengthened the teams and they are working on improvements to ranging, merchandising, pricing and promotions.
In Europe, General Merchandise, Clothing and Electrical sales were strong, reflecting an overall improving consumer background. Clothing sales increased by nine per cent at constant exchange rates in Central Europe and Tesco is now clothing market leader in Hungary and the Czech Republic and Slovakia.
Building on the success of the F&F brand, it has introduced the F&F Blue and F&F Basics sub-brands in Europe and opened its first standalone clothing store in Prague last autumn.
F&F, now in four Asian markets, has seen a strong early response from customers.