Investments: Tesco Sees Sales Grow Internationally



Tesco has reported an increase in profits for the first six months of this year despite a decrease in underlying sales for the UK. For the first half of the year though August 27, pre-tax profit was £1.9 billion, a 12.1% increase from the year before. Group sales increased 8.8% to a total of £35.5 billion. However without VAT or petrol, UK sales fell by 0.5%.

Less Demand in the UK

The company pointed out a superb growth record for both Europe and Asia, but “subdued demand” for the UK, where Sainsbury’s reported better like-for-like sales. Without petrol but not VAT, sales for Sainsbury’s increased by 1.9% for the first half of the financial year. With VAT, Tesco saw a rise of 0.5%.

“We have delivered a good sales performance in a tough consumer environment,” said Justin King, chief executive of Sainsbury’s.

With Tesco’s difficulty in these tough environments, especially in the UK and the Irish Republic came exceptional growth in economies that were emerging. Weak sales growth in the UK was not corrected by less demand for anything that wasn’t food, especially in both electronics and entertainment, which were previously strong products for the company.

Other Reasons

In addition, the company detailed the high costs of petrol along with the impact that had on general spending for consumers, who have been focusing on the purchase of necessities rather than extra items.

Trading profits in the UK increased to £1.3 billion, an increase of 4.5%, even though like-for-like sales had fallen. Tesco earns around two-thirds of sales and profits from the UK.

In areas outside the UK, like-for-like sales without the inclusion of petrol grew, with a growth in the US of nearly 12%, with the plan to break even in the country for 2012-2013 becoming “promising”. Europe saw like-for-like sales increase by 1% and in Asia, it grew by 3.8%.

This news comes after a summer of struggles, as Tesco’s made a move in August to sell its Japanese business. In addition, similar news was reported in June, with the numbers brought out in September reflecting the data from June, with a better than expected international result.

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