No 'quick fix' for Tesco's Irish arm as €114m wiped off sales last year
Tesco's Irish business saw €114m wiped off its sales last year as it battled intense competition from supermarket rivals.
The chain said its sales in Ireland, including fuel and excluding VAT, tumbled 6.3pc to €2.55bn in the last financial year, making it the worst performer of any of the group's businesses.
Financial results released by the group - the world's third-largest grocery retailer - have highlighted the tortuous time Tesco is having across the world, from Ireland to South Korea. It reported a £6.4bn (€8.9bn) loss for its last financial year - the biggest ever recorded in its near century of trading, and one of the worst ever notched up by a British firm.
Most of the losses were the result of huge falls in the value of the retailer's vast property portfolio and don't involve it actually losing cash.
But Tesco, whose chief executive is Dave Lewis, said that its group-wide trading profit - the money it actually made from selling groceries, fashion and homewares - plummeted 58pc to £1.4bn (€1.9bn) during its last financial year.
Tesco operates 149 stores and 22 petrol stations in Ireland. Until last month it was the country's top grocery retailer - a position it had held for over a decade.
But according to figures published earlier this month by research group Kantar Worldpanel, SuperValu is now the biggest grocery retailer in Ireland, edging Tesco into second place.
For many years, Tesco's Irish business was the most profitable division within the group, but it's been under intense pressure, especially since the downturn played into the hands of German chains Aldi and Lidl.
But the sales decline experienced by Tesco is also a result of grocery price deflation, with the cost of goods for consumers continuing to decline. That results in less money going through retailers' tills.
Clive Black, a retail equity analyst with UK firm Shore Capital, said Tesco, which was battered by an accounting scandal last year, is facing challenges in Ireland, particularly with the success of the German chains.
"Ireland is a market where the discounters are more ingrained with two strong local players that means there is no quick fix and investors will need to be patient," he said.
Newly appointed Tesco Ireland chief executive Andrew Yaxley said the Irish market remains highly competitive.
"We are already seeing early indications that we are moving in the right direction with an uplift in customer loyalty and fresh produce volumes, which are important positive indicators of growing customer confidence," he said.