Tesco chief claims plan to turn chain around a success
PHILIP CLARKE, chief executive of Tesco, has declared his £1 billion plan to turn around the supermarket’s UK business is working.
The plan was unveiled in April, after Mr Clarke presided over Tesco’s first profit warning for 20 years in January, thanks to the worst trading for decades in the home market over Christmas and New Year.
Although Tesco reported its first profit fall in 18 years, he was able to deliver the news that sales from UK stores open at least a year were positive, with 0.1 per cent growth, after six quarters of declines.
“The UK is on time and on track,” he said yesterday. The UK, despite Tesco’s presence in 12 other countries, still accounts for about two-thirds of sales and profits. Mr Clarke added: “This is only the start of a long journey; a long journey to come to a very different Tesco.”
He has been seeking to end a period of underperformance in the UK by refurbishing stores to make them more welcoming, adding features such as bakeries, and introducing 8,000 full-time equivalent staff.
But Tesco has also been aggressively issuing money-off coupons, leading some investors and analysts to ask if it is buying sales in its home market. Mr Clarke insisted that this was not the case.
Industry data show that Tesco’s sales have stabilised. However, the most recent figures from Nielsen show that sales growth has stalled again in the past four weeks.
While Mr Clarke was able to claim some advances in the UK, he has been fighting fires in the far-flung areas of the Tesco empire.
“Could do better all round,” is how one top 20 shareholder described the performance.
While UK trading profit fell 12.4 per cent to £1.1 billion in the six months to August 25, reflecting the decision to invest in the UK, international trading profit was down 17.1 per cent to £378m, as profits fell in Asia and Europe. And losses in the US remained stubbornly high. – Copyright The Financial Times Limited 2012