Tesco upbeat and shrugs off bad weather

Tesco, the world’s third largest retailer, is positive about its outlook as it swept aside the wettest summer on record and announced better performance than rivals such as Sainsbury’s to push profits up 18% to £1.3 billion in the first 6 months of 2007.

With the City looking for signs of a slowdown, Tesco shrugged off pessimism and continued its plans for world domination. The supermarket giant is already the biggest player in the British grocery market with a 30% share and it now plans to take on Wal-Mart in the US. In a few weeks time, it is to launch its Fresh & Easy stores on the west coast of America.

The attack on the west coast of America commences in November, the supermarket plans to have at least 50 stores by the end of the financial year, stating that its offer of a pension, healthcare and a good wage was enticing experienced supermarket staff away from its competitors.

Like-for-like sales grew at just 2.4% in the second quarter - down from 4.7% in the first 3 months of 2008, a great August meant there was little indication of problems, August like-for-likes rose 5%.

Sir Terry Leahy, the group’s chief executive commented that it had been a difficult few months in the core UK grocery business due to unseasonal summer weather and recovering competitors.

According to analysts, Tesco is up against strong competition now with a rejuvenated Sainsbury’s and better management at Morrison’s and Asda. However, Tesco is now so huge, it can compensate for any minor difficulties from one part of its business. Sales were up 35% at its internet division as an increasing amount of people book deliveries online and a partnership with Royal Bank of Scotland made profits of £53 million.

Tesco sales in the 6 months to 25 August approached £25 billion, up 9% on 12 months ago. The company announced that it plans to create 25,000 jobs worldwide this year.

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