Tesco £1bn investment underway as UK sales fall
The news comes after Tesco announced its financial results for the period ending February 25.
Tesco’s international business contributed £1.1bn to the overall profit of the group, despite UK profits declining for the first time in more than 20 years.
Like-for-like sales in the UK fell by 1.6% in the fourth quarter driven largely by reduced levels of inflation resulting from self-imposed price drops in the food and grocery division, according to the firm.
Trading profit in the UK was also down 1% for the full year, weakened significantly by a disappointing performance over the all-important Christmas period.
Raise our game
Ceo Philip Clarke admitted that “we need to raise our game in the UK” and confirmed that the new investment would provide better value and service in UK stores.
The plan is beginning with the recruitment and training of over 8,000 new staff in existing stores, part of 20,000 new jobs over two years, a statement from the firm revealed.
Overall, group sales were up 7.4%, to £7.2bn for the year. Profit before tax was also up 5.3% to £3.8bn for the period.
City analysts described the news as the firm’s “second big day of the year” following the firm’s profit warning in January.
But experts remained cautious on the results and expressed concern about the performance of the UK business.
Clive Black, analyst at Shore Capital said: “All in all, Tesco's update provides a safety net of sorts to the present share price, assuming no further disappointment. However, the business performance has to improve, as evidenced by a 1.6% decline in UK Like-For-Like sales in the fourth quarter. The market needs to see that improvement.”
