Tesco's star rising as its figures point to growth
Published 03/11/2010 | 05:00
Tesco's Irish operations will be one of the star performers for the global retail group over the next few years with an internal shareholder document predicting 4.7pc sales growth this financial year, 9.6pc in the 2012 fiscal period and a further 7pc per annum over the following three years to 2015.
The retailer is on target to post sales in Ireland, excluding VAT, of £2.4bn (€2.75bn) in the current financial year, and earnings before interest, tax, depreciation and amortisation (EBITDA) of £245.3m (€281m).
The projections were included in a shareholders' document published by Shore Capital, a London-based investment bank, using data supplied by Tesco.
The figures prepared by Shore Capital also notes that Tesco Ireland will deliver an earnings before interest and tax (EBIT) margin of 7.2pc this financial year, up from 6.9pc last year. The EBIT margin should rise by 0.1 percentage point each year for the next five years.
John Ruddy, the editor of influential trade magazine 'Checkout', which disclosed the data yesterday, said that based on the figures in the document, Tesco was likely to command a 30pc share of the €9bn Irish grocery market by 2012 if it continues store expansion at the current rate.
The retailer officially opened a major new outlet in Naas, Co Kildare, this week. Tesco currently has a 27pc share of the market, making it the biggest player ahead of its closest rival Dunnes Stores, which has a 22.6pc share, according to research group Kantar Worldpanel.
Mr Ruddy told the Irish Independent that he reckons Tesco will "comfortably" post sales, excluding VAT, of about €3.5bn by 2015 based on the information revealed in the shareholder document.
"Ireland is probably close to being overshopped, but Tesco doesn't think its 'over-Tescoed'," he said.
He added that the grocery market in Ireland has declined in value by about 5pc in each of the past couple of years, and that Tesco would be pushing to gain market share by opening new stores and siphoning sales from every other retailer here, including Musgrave's Super Valu, Superquinn, Dunnes Stores, Lidl and Aldi.
Over 80pc of Irish households shopped in Tesco in the 12 weeks to October this year, although that figure is down from over 82pc a year ago.
Mr Ruddy believes Tesco has significant firepower available to it in terms of additional price reductions if it wanted to launch any further battles to secure extra market share.
Last month, Tesco chief executive designate Phillip Clarke said despite the difficult economic conditions in Ireland, the retailer's operations here had delivered a "remarkable turnaround".