Tesco results to reveal profits up

Supermarket giant Tesco is expected to shrug off tough UK retail conditions with another set of record results when it reports figures tomorrow.









Chief executive Philip Clarke is likely to reveal a £3.8 billion underlying profits haul in what will mark his inaugural set of full-year results since taking the top job on March 1.



But the improvement - up from £3.4 billion the year before - comes against increasingly difficult conditions for Britain's retailers.



As well as having a tough act to follow in predecessor Sir Terry Leahy, Mr Clarke is faced with a tough trading climate as spending slows and cost pressures mount.



Consumers are tightening their belts as the Government's austerity measures start to bite, which is hitting supermarkets hard.



Rival Sainsbury's recently shocked the market with fourth quarter like-for-like growth of 1% excluding fuel, implying an underlying fall of up to 1% when VAT is stripped out and an even bigger decline after inflation.



The sector has been slashing prices to lure in cost-conscious consumers.



Official inflation figures this month revealed that food prices declined by 1.4% in March - the biggest month-on-month drop since between June and July 2007 - as supermarkets rolled out heavy discounts. This helped the overall rate of UK inflation to ease back to 4% from 4.4% in February.



Tesco recently upped the ante, launching a £200 million price war with Asda after a poor Christmas left it trailing behind its closest rival.



Tesco posted a sales rise of 0.6% for its six-week festive period, against a 2.6% hike in like-for-like sales at Asda for the final quarter of 2010.



Analysts believe Tesco was badly hit by the weather over Christmas, but the recent Sainsbury's disappointment has highlighted that trading has remained hard since then.



Clive Black at Shore Capital is forecasting zero growth in like-for-like sales during Tesco's final quarter to February 26, excluding VAT.



He believes non-food sales will have acted as a drag on the overall performance during the quarter as consumers cut back on non-essentials.



But a more resilient performance elsewhere is expected to have fuelled annual profits growth, with Tesco's Asian operations helping offset any UK weakness.



Kate Calvert, retail analyst at Seymour Pierce, said: "We expect a solid set of results from Phil Clarke's first solo full-year results although all eyes will be on the UK to see how a lack of innovation and competitive pressure has impacted the mighty tanker.



"International is expected to deliver a strong result with Asia likely to be the highlight."



She believes there will be positive news on its US chain Fresh & Easy, which suffered a rocky start after an ill-timed launch on the cusp of the recent US recession.



But it is still set to remain in the red, with Tesco saying at the half-year stage the division would not reach profitability for two years.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence