Britain's biggest retailer Tesco reveals falling half-yearly profits for the first time since 1994 as a result of a costly turnaround plan. UK sales rose slightly in the second quarter.
Tesco, the world's third largest retailer, said group profits in the first half fell 10.5 per cent to £1.6bn, while UK trading profit fell 12.4 per cent to £1.1bn. Tesco makes more than 60 per cent of its trading profit in Britain and the figures were in line with analysts' expectations.
Group sales increased 1.4 per cent to £36bn. Sales at UK stores, excluding fuel and VAT sales tax, were up 0.1 per cent in the 13 weeks to 25 August, its fiscal second quarter.
"We have a long way to go for Tesco here in the UK," Philip Clarke told reporters today, adding that customer feedback from Tesco's £1bn turnaround plan, called "Build a Better Tesco", was encouraging.
"We continue to act decisively to tackle challenges and seize opportunities across the group. The external environment continues to present challenges all over the world.
"Whilst our businesses in Asia and Europe have continued to do a great job for customers, our financial performance there reflects the tough economic backdrop and particularly the regulatory changes in South Korea.
"That we have gained or held market share in the majority of markets is a testimony to the skill of our teams across the group."
Under the turnaround plan, stores have been revamped, more than 8,000 extra staff recruited and food ranges have been updated.
Bryan Roberts, analyst at Kantar Retail, told Channel 4 News that while Tesco's performance was slipping, Waitrose had been doing surprisingly well, considering the economic downturn.
"There's been several years underinvestment in stores, underinvestment in people, and in product. They were more interested in peripheral things like financial services, in keeping the City happy, rather than shoppers", he said.