According to figures produced by the research consultancy AGB, Tesco has moved ahead of J Sainsbury as the UK's largest grocer. Figures for March show Tesco with a market share of just over 19 per cent, compared with Sainsbury's 18.5 per cent.
However, other figures show the two are neck-and-neck. Tesco was anxious to play down the significance of its apparent march ahead of Sainsbury yesterday. A spokesman said: "These are just one set of figures. It depends which measurements you use."
While Tesco yesterday unveiled pre-tax profits of £595m on sales of £10.9bn last year, figures due from Sainsbury next month are expected to show profits of £803m on sales of around £12bn. Commenting on the results, Tesco's chairman, Sir Ian MacLaurin, said: "It's still too early to say if a real recovery has started in the UK."However he added that Tesco's results demonstrated that people would "trade up when they feel more affluent".
Tesco said its Club Card loyalty scheme, which was launched in February, had proved a great success and now had 5 million members. The card, which was criticised as a gimmick by rivals at the time, entitles customers to a discount of 1 per cent. Sainsbury has said it will not introduce a similar scheme.
Tesco has also been successful with new store formats as the Government clamps down on out-of-town planning applications for the superstores that fuelled growth in the 1980s. It is expanding its successful Tesco Metro chain of city-centre storesand testing a Tesco Express format that includes a convenience store alongside a petrol station.
Tesco has been heading off the attack from the discount groups with price cuts of its own. In addition to its Value Line of budget-priced items such as bread and baked beans, it introduced a New Deal initiative in October offering special discounts on certain lines. This has led to a slight fall in the profit margin.
The French business Catteau increased sales by 16 per cent to £16m, with 12 per cent coming from new stores.
William Low, the Scottish supermarket group acquired last year, contributed £11m to profits last year and has started lifting sales, which had been falling before Tesco's takeover.
The company said it did not expect to make any acquisitions this year but would like to buy something on the Continent in the next few years.
For the year to 25 February Tesco's pre-tax profits rose 12.7 per cent to £595m on sales up 17.6 per cent to £10.9bn. The dividend was increased by 11 per cent to 8.6p. Like-for-like sales increased by 4.3 per cent, although sales growth in December reached 7 per cent. Analysts are forecasting profits of around £660-£680m next year. The shares closed 2.5p down at 271p.
Comment, page 33