Tesco appears to have staunched the decline in its Irish revenues, but the British-owned grocer is still lagging the market here.
Tesco Ireland reported relatively flat sales of just over €1.2 billion for the first six months of its financial year, covering the period from April to September. This compares with a fall of 3.7 per cent for the same period last year.
In addition to grocery sales, the figure, which was up marginally by 0.2 per cent, also includes fuel revenues at Tesco forecourts. The group does not break out its profitability for the Irish market or the value of its grocery sales alone.
Tesco has stopped the slide in its Irish operations: its revenues were down 1.9 per cent on the full year last year, while the last three months were its third successive quarter of minor growth. The grocery market is growing at 3.7 per cent, according to research agency Kantar.
Tesco faces stiff competition from number one player Supervalu and from Dunnes Stores, which has drawn level with Tesco as the second biggest grocer by market share, on 21.6 per cent. German discounters Lidl and Aldi are also investing heavily to lure shoppers away from the UK group.
Fresh food
Tesco Ireland attributed the marginal increase in its sales here to “investment in ‘Staying Down’ prices with improvements in sales volumes, particularly in the important fresh food category, and an increase in the number of customer transactions”.
"We continue to invest significantly in reducing prices for customers through our 'Staying Down' campaign," said Andrew Yaxley, chief executive of Tesco Ireland. "This is our third successive quarter of positive like-for-like sales and we're pleased to see strong positive volume growth as a result of our investment in strengthening our customer offer."
Tesco Ireland said there was "strong growth" in its online shopping business. It also noted that it had opened a new customer care centre in Waterford, and staff levels had been increased on the busiest days of the week.
Meanwhile, the wider Tesco group set out hopes to increase its profitability in the next three years, after reporting a 60 per cent rise in first-half profit and a third straight quarter of UK underlying sales growth.
“Today, we are sharing our ambition to deliver a group operating margin of between 3.5 per cent and 4 per cent by our 2019/2020 financial year,” it said. This result would be up from 2.18 per cent.
The company made operating profit before one-off items of £596 million (€675 million) for the six months to August 27th.
That compares with £354 million in the same period last year and analysts’ forecasts which ranged £487 million-£624 million.
Tesco said it was on track to deliver profit of £1.2 billion for the full year, broadly in line with market forecasts.
