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Tesco Ireland sales drop 2.4pc in 2011


Photo: Getty Images

Photo: Getty Images

Photo: Getty Images

SUPERMARKET giant Tesco has reported a 2.4pc drop in sales across its Irish stores in the year ended February.

Tesco Ireland, which employs 14,925 staff in Ireland and does not disclose profit figures for this market, said the fall in sales was a result of lower prices and “continued market decline”.

The company had sales of €3.07bn in the year as it built over 10 new shops and revamped 47.

Its online grocery shopping grew with sales up 21pc to €57.1m.

“Despite a continuing stressed domestic economy, Irish consumers are proving resilient and adopting practical responses to the pressures on family incomes,” said chief executive Tony Keohane.

Tesco said it will invest £1bn (€1.2bn) in improving its British stores, after it announced marginally better results than expected but admitted it would drastically scale back its expansion there after poor sales.

It was still able to post record pre-tax profits of £3.84bn, helped by making £1.1bn from its overseas supermarkets, the first time it has made more than £1bn from its non-British businesses.

But Philip Clarke, the chief executive, said that it would cut the company’s capital expenditure from £3.8bn a year to £3.3bn this year to fund a full “refresh” programme in Britain with 430 of its largest supermarkets given a revamp this year.

It said trial stores had already used less garish signs, and “ warmer colours, better lighting”. It has already announced a revamp of its £1bn Value range of low-priced food.

Today it said: “The Tesco standard ranges, which comprise more than 8,000 products and represent around 40pc of our UK food sales, are being comprehensively upgraded with a programme of range-by-range improvement, including over 2,000 new lines, through to April 2013.”

The all-important like-for-like trading at its UK stores fell by 1.6pc in the final quarter to the end of February, better than expected and an improvement in trading, which over Christmas fell by 2.3pc. Over the course of the full year it fell by 0.9pc.

It said: “The more important driver of this deterioration, which was more pronounced in December and January, was a lack of couponing activity at a time when the industry at large was issuing large volumes of cumulative spend coupons. We have since remedied this with a more active couponing programme.” In recent weeks it has been giving out many £5 vouchers for those people buying £40 on groceries.

Full-year pre-tax profits increased by 5.3pc to £3.84bn, a record level, helped by £1.1bn of profit from its overseas businesses, the first time it has made more than £1bn from its non-British supermarkets. This offset a 1pc fall in UK trading profits to £2.5bn.

Tesco, despite all of its troubles, remains the only retailer to have made an annual pre-tax profit of £2bn, let alone £3bn.

Overall group sales increased 7.4pc to £67.1bn.

One major disappointment is the full-year loss from Fresh & Easy, its grocery chain on the west coast of America. Full year losses hit £153m. Many analysts hoped this loss, which was £180m in the previous year, would fall to £120m.

Tesco shares rose 1.8pc in early trading.