Turnover in first half at Tesco comes in at £680m

Sales at Tesco's supermarkets in the Republic and Northern Ireland have reached over £680 million (£599 million sterling) with operating profits of over £27 million (£24 million sterling) in the first half of the year, Tesco's results for the 24 weeks to the middle of August reveal.

Tesco does not give a breakdown between the Republic and Northern Ireland, but says that "like-for-like" sales in the North were up 17 per cent while "like for like sales" in the Republic were 8 per cent higher.

"Like-for-like" comparisons are based on the sales from the same floor space as the previous year, excluding new selling space. The results are not directly comparable with the first half of 1997 which included a 14-week contribution from the Quinnsworth, Stewarts and Crazy Prices operations bought from Associated British Foods for £630 million.

But for the 43 weeks to mid-February, Tesco had sales in Ireland of £1.26 billion and operating profits of £56.4 million.

In its statement, Tesco says that there are a number of locations in Ireland that would benefit from a Tesco superstore, and that most of the stores it wants to open are under the new 32,300 square limit imposed by the Department of the Environment.

Tesco says that it hopes to open two new stores in the Republic next year. In the North, five new stores will be opened over the next year, the first of these in Dungannon next February, followed by Lisburn, Newcastle, Belfast and Banbridge, although Banbridge is subject to planning permission.

A total of £53 million was spent on capital expenditure in the Republic and Northern Ireland in the first half.

A spokesman for Tesco said that developing a superstore at the Liffey Valley Centre, west of Dublin, would be dependent on the 32,300 square feet cap on selling space being lifted by the Department of the Environment. Tesco paid £25 million for this 11-acre site before the cap was introduced earlier this year.

He added that the proposed Ayrfield store in north Dublin is subject to planning permission, but is not affected by the cap on selling space, as the application was lodged before the new restrictions were introduced.

Overall, Tesco, which is Britain's leading supermarket group, turned in a rise in half-year profits on Tuesday and said it planned to create 10,000 jobs.

Pre-tax profits for the 24 weeks ending August 15th were £365 million sterling, up from £346 million a year ago and just a fraction lower than forecasts of £366370 million, pencilled in after a series of briefings in early August triggered downgrades.

The group, which has a market share of around 15 per cent in the UK and around 25 per cent in Ireland, said same store sales in the five weeks since mid-August had grown 2.5 per cent, representing a slowdown from half-year increases of 4.3 per cent.

Chief executive Mr Terry Leahy, describing market conditions as "competitive", said that Tesco would "fight on all fronts" to remain ahead. He said Tesco would try to ensure "whatever trade there is to be had, that we get more than our fair share of it."

The supermarket sector has felt ripples from the slowdown, and Tesco rivals Sainsbury and ASDA have this week initiated advertising campaigns focusing on value.

But analysts said Tesco reassured investors there was a slowdown rather than a recession, adding the food industry "manages well through such times". They said there were no signs current emphasis on value might escalate into a price war.