Tesco profits top £2 billion

The UK's leading supermarket chain, Tesco, has become the first British retailer to announce annual profits in excess of £2 billion.

The latest figures revealed by the company show that the group posted underlying pre-tax profits of £2.03 billion, an increase of 20.5% from 2004 figures.

The supermarket reported global sales of £37.1 billion with the UK accounting for £29.5 billion of the sales.

Non-food sales have helped contribute to Tesco's massive profits with the company reporting "excellent progress" in the non-food sector. Sales growth in this area increased by 17% overall to £6 billion.

The company reported strong growth in all the large non-food categories, with a 20% growth in home entertainment sales, 26% growth in stationery, news and magazines and 13% growth in health and beauty products.

The group's clothing ranges, Cherokee and Florence & Fred, also achieved "significant growth" and clothing sales increased by 28% in the year.

Tesco's international operations also continued to make "good progress", the company reported, with an increase of 18.3% in international sales. Sales grew by 13.1% at actual rates to reach £7.6 billion.

Tesco reported that, at the year-end, the group's international operations were trading from 586 stores, including 273 hypermarkets.

Commenting on the latest figures, Chief Executive Terry Leahy said: "These results again demonstrate the broad appeal of the Tesco brand. They also show that our new growth businesses – in international, in non-food and in services – have contributed as much profit as the entire business was making in 1997."

Tesco have also announced plans to create a further 25,000 jobs worldwide this year.

Analysts have been reported as saying that Tesco's increasing expansion into the non-food sector, with growing sales of clothes, electrical products and CDs, has impacted on other high street businesses.

It has also been reported that Tesco has been blamed for putting pressure on suppliers, such as farmers, by engaging in a "price war" with its closest rival, Asda.

Liberal Democrat Rural Affairs Spokesperson Andrew George said: “These profits were secured on the back of a dire situation for the farmers who supply supermarkets. While Tesco’s profits soar farmers and growers are going out of business."

“Consumers need reassurance that their purchases are not damaging the viability of British farming. It is time the Government introduced a food trade inspector within the OFT to ensure the benefits of this success are spread throughout the food supply chain.”

(KmcA/GB)