Posted on April - 22 - 2010
Tesco to create 2,000 north west jobs after record profits
Supermarket giant Tesco today unveiled a 10.1 per cent rise in annual profits to a record £3.4bn and said it was on target to create more than 2,000 jobs in the north west this year.
Tesco’s results came despite slowing UK sales growth in the year to February 27 amid tougher competition and easing food inflation.
Chief executive Sir Terry Leahy said the retailer – which plans to create 9,000 jobs nationwide this year – “had weathered the economic storm well”.
The chain, which has 174 stores employing over 23,000 staff in the north west, plans a series of openings across the region, including branches in Walkden, Salford, which will create 100 posts, and one in Middleton, generating 180 jobs.
Tesco said UK like-for-like sales growth for the overall year slowed to 3.2 per cent, but the chain – which claims nearly a third of the market – fought back against “big four” rivals Sainsbury’s, Asda and Morrisons with promotions on its Clubcard loyalty scheme.
Finance director Lawrie McIlwee said consumer confidence was “improving” although there was uncertainty around the outcome of the general election. He predicted a “slow and steady” pull out of recession for the UK, adding: “There is a huge deficit out there and there will be tightening. Our job is to make sure we do the best job for our customers.”
The group’s non-food business generated £9bn in UK revenues after steadily improving sales over the year.
The business now sells one in every six microwaves in the UK as well as one in four small screen televisions, while toy sales were up 25 per cent year on year helped by the collapse of retailers such as Woolworths.
Clothing sales meanwhile reached £1bn for the first time, and the group is expanding its Florence & Fred range to target teenagers for the first time.
Mr McIlwee also shrugged off Asda chief executive Andy Bond’s ambition to become the biggest player in non-food within five years in a presentation to analysts last week.
“The previous bloke said that and the bloke before him said that as well,” he added. While the majority of Tesco’s sales are in the UK, international sales accounted for £17.5bn of its £56.9bn annual revenues.
The retailer expects non-food and international sales to grow fastest in the recovery, although the group recorded a £165m trading loss at its fledgling US business, where losses should have now peaked.
Its banking arm, which has more than six million customers, saw trading profits up 13 per cent to £250m and performed strongly in a “challenging” retail banking market.
Shares in Tesco edged lower today as Hargreaves Lansdown analyst Keith Bowman said the retailer had turned in “solid if largely unexciting” results.
He said: “Despite a broadly progressive performance, the results still leave room for doubt. An international growth strategy continues to set the group apart from arch UK rivals Sainsbury’s and Morrisons, whilst exposure to non-food products and services should provide upside in a sustained economic recovery.
“Nonetheless, momentum for the group’s core UK food sales has yet to be found, with the result that consensus market opinion has moved from a cautious buy this time last year to a strong hold.”
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