Supermarket chain Tesco has reported its first fall in profits in 19 years.
In Ireland, where Tesco is also the biggest grocery retailer with a 27.5pc share of the market, the company’s like-for-like sales declined 0.3pc in the financial year. That was slower than the 2.4pc rate of decline it recorded here the previous year, which was the worst performance of any Tesco business.
But while Tesco’s operations here recorded a 0.3pc rise in like-for-like sales in the first half of the financial year, by the third quarter it was in decline. That fall accelerated to a rate of 1.4pc in the fourth quarter.
The retailer’s overall sales in Ireland – which includes stores open less than a year – rose 1.9pc to €3.15bn in the last financial year.
The head of the Irish arm, Tony Keohane, said the market is “very challenging”.
“Customers are spending less and retail competition has become even more intense,” he said.
Tesco warned that in Ireland “after a period of relative calm following its early exposure to the crisis, customers are facing a further round of austerity measures which has further impacted spending”.
The retailer has confirmed it will exit its loss-making business in the US, taking a €1.53bn write-off that knocked its year profit down for the first time in two decades.
The world's third-largest stores group said today that it made a pretax profit of 1.96 billion pounds in the year to Feb. 13, down 51.5 percent.
The group also wrote down the value of its property in Britain, by 804 million pounds, and took a writedown on its businesses in Poland, Czech Republic and Turkey of half a billion pounds.
The raft of announcements form part of Tesco's fightback following a tough period for what was once one of the UK’s most consistently performing companies. Its full year results also showed that growth in its core home market had slowed.
"The announcements made today are natural consequences of the strategic changes we first began over a year ago and which conclude today," Chief Executive Philip Clarke said.
The world's third-largest stores group said on Wednesday it made a pretax profit of 1.96 billion pounds in the year to Feb. 13, down 51.5 percent.
It also reported a 14.5 percent fall in underlying full-year profit, largely reflecting the cost of a turnaround plan for its home market, launched after a shock profit warning in January last year.
Despite heavy investment, the group said fourth quarter sales at British stores open over a year, excluding fuel and VAT sales tax, grew 0.5 percent - a slowdown from growth of 1.8 percent in the six weeks to Jan. 5.
Tesco's 1 billion pound fightback plan for Britain focused on more staff, refurbished stores, revamped food ranges and price initiatives - all aimed at reversing years of underinvestment and halting a loss of market share to rivals like J Sainsbury and Asda.
Earnings have also been hit by the impact of the euro zone debt crisis on eastern European markets, restrictions on store opening times in South Korea, and losses at the U.S. business Fresh & Easy.
In the U.S., it has decided to exit altogether.
Fresh & Easy, which trades from 199 stores and employs around 5,000, has absorbed over 1 billion pounds of capital since its 2007 launch when Tesco was run by Clarke's predecessor Terry Leahy but has never turned a profit in a market where it competes with the likes of Trader Joe's, Whole Foods Market and Wal-Mart
Clarke put the venture, which contributes just 1 percent of group turnover, under review in December, saying an exit was likely.
The group made an underlying pretax profit of 3.55 billion pounds. That compares to analysts' consensus forecast of 3.50 billion pounds, according to a company poll, and with 3.92 billion pounds made in the 2011/12 year.