Tesco's domestic profits climb to £2.4bn

LONDON - Tesco has reported a 6.7% rise in UK profits to £2.4bn in 2009, after revenue rose 4.2% to £43bn.

Tesco: recorded profit of £2.4bn for 2009
Tesco: recorded profit of £2.4bn for 2009

The company claimed its loyalty strategy, which saw it relaunch its Clubcard scheme to give people double points in May 2009, helped it maintain "steadier sales growth" than its rivals.

It reported that 18% more households are now redeeming Clubcard vouchers than a year ago.

Tesco commented that its discount brands, , "deflated sales growth initially, but it was the right thing to do for customers".

The company's non-food sales in the UK hit £9bn, and international non-food sales £4.1bn, with total growth of 6.2%. Tesco now claims to sell one in every six microwaves in the UK and one in four small-screen TVs.

In entertainment, specifically in games, Tesco claims that its market share has doubled in the last year, as a result of allocating more space and being more competitive on new releases.

In clothing, sales grew 7.3% to reach £1bn for the first time. This was driven by a 15% increase in children's wear and the launch of Tesco's online clothing range.

Tesco's online business, which covers grocery and Direct, witnessed a 14% sales increase with profits up 26% to £136m. It claims to have the third most- visited retail website in the UK.

Customer numbers for its Telecom's business, Tesco Mobile, grew by 14% over the period. It now has more than two million customers, benefiting from an above-the-line campaign created by Tesco's creative agency, Red Brick Road.

Sir Terry Leahy, chief executive of Tesco, said: "Across the group, we have successfully adapted our cost structures and ranges to help customers save money when they have needed to, and treat themselves when they've wanted to."

Revenue from outside the UK totalled £17.5bn – the Asia operations performed best with a 23.9% rise in trading profit to £440m.

But the Europe operations suffered a 4% drop to £474m and the company's US operations, under the Fresh & Easy brand, continue to struggle, making a £165m loss.

Tesco said it did not expect US losses in 2010/11 to be much lower, but believed they had peaked.

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