Tesco Ireland claims price cuts of €30m

Tesco Ireland has reduced prices by €30 million so far this year, the company's parent has claimed.

Tesco plc said trading in Ireland was going well and its new Express convenience stores and three petrol stations were "well received by customers".

The emphasis on price cuts prompted some market observers to predict further downward pressure on prices. Merrion Stockbrokers said Tesco's decision to make €30 million of cuts amounted to 1.5 per cent of Irish sales.

"Tesco's private label business continues to perform strongly, the Finest range added 400 new lines during the period and the Value range extended to over 2,000 products," said analyst Mr Robert Brisbourne.

Meanwhile, speaking at the Marketplace Ireland event organised by Bord Bia, Mr Tim Mason, marketing director of Tesco plc said the group now purchased €420 million worth of Irish goods for its stores in the UK.

Tesco issued half year results yesterday, but does not break out Irish profit and loss figures separately.

The results showed it further boosted its domination of the supermarket sector in Britain as it beat market expectations with a 24 per cent increase in half-year profits to £822 million sterling.

Strong sales of clothing and DVDs proved the success of the UK's biggest grocery chain's expansion into non-food products, where it has been capturing market share from a string of high street rivals.

Chief executive Sir Terry Leahy said the group was well-placed for the rest of the financial year after the "excellent results", which saw like-for-like sales at the group's core UK stores surge 8.3 per cent.

"We are well-placed to meet the challenges of tougher comparisons during the second half," he said.

Analysts had expected sales to slow slightly over the summer, in line with other retailers who have been hit by poor weather conditions.

Analyst James Grzinic at brokers Dresdner Kleinwort Wasserstein described the results as "truly astonishing".

He said: "The company is firing on all cylinders and all divisions appear to have equally contributed to numbers that are some 7 per cent better than consensus."

Dresdner revised its profits forecast for the current financial year to just over £2 billion (€2.92 billion), as did brokerage Seymour Pierce. - (additional reporting, PA)