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Tesco sees profit rise to £2.8bn Tesco sees profit rise to £2.8bn
(about 1 hour later)
Tesco has reported an 11.8% rise in annual profits for 2007 to £2.846bn, meeting analysts' forecasts.Tesco has reported an 11.8% rise in annual profits for 2007 to £2.846bn, meeting analysts' forecasts.
Group sales at the UK's largest retailer rose to £51.8bn, up 11%.Group sales at the UK's largest retailer rose to £51.8bn, up 11%.
International sales were up 25.3% and Tesco said that it now made half of its group trading profit from its stores overseas. Tesco said prices had risen by about 1.5% across the board, but increases in food prices masked price cuts in non-food items.
Tesco defended its plans to expand in the US, saying its Fresh & Easy stores there were "well received by customers and growing strongly". The UK High Street has suffered as households have been squeezed by higher mortgage costs, fuel and food bills. But Tesco remained upbeat.
Like-for-like sales excluding petrol in the UK rose 3.5% during the year to February as Tesco battled a wet summer, a consumer slowdown and "recovering competitors".
By the same measure, UK sales were up 4% in the first five weeks of 2008.
The supermarket group said it would create 30,000 new jobs worldwide this year, with about a third planned in the UK.
Sales growth
"The breadth of the group and the strength of our business model have enabled Tesco to deliver another year of double-digit sales, profit and earnings per share growth - in challenging market conditions," said Tesco chief executive Terry Leahy."The breadth of the group and the strength of our business model have enabled Tesco to deliver another year of double-digit sales, profit and earnings per share growth - in challenging market conditions," said Tesco chief executive Terry Leahy.
"We begin the new financial year confidently - with a good start in the UK, excellent progress in our established international markets and promising early performance from our investments in future growth, particularly in the United States, China and Turkey," he added."We begin the new financial year confidently - with a good start in the UK, excellent progress in our established international markets and promising early performance from our investments in future growth, particularly in the United States, China and Turkey," he added.
Like-for-like sales excluding petrol in the UK rose 3.5% during the year to February as Tesco battled a wet summer, a consumer slowdown and "recovering competitors". Analysts had expected a robust performance from Tesco, but had been concerned about the group's performance in the US.
By the same measure, UK sales were up 4% in the first five weeks of its new financial year. It opened its first Fresh & Easy stores last November as fears thickened that a US recession was on its way.
But the supermarket chain said that it was "encouraged" by the performance of the first 60 convenience stores, modelled on Tesco Express, located in southern California, Arizona and Nevada.
Another 150 Fresh & Easy stores are expected to be open by the end of the year.
Overseas expansionOverseas expansion
Tesco's expansion drive overseas will continue this year with plans to open 11.5 million square feet of new store space, with 80% of this outside the UK. International sales at Tesco were up 25.3% and it said that it now made half of its group trading profit from its stores overseas.
This will see the supermarket group create 30,000 new jobs worldwide, with 150 Fresh & Easy stores expected to open in the US by the end of the year. Its expansion drive overseas will continue this year with plans to open 11.5 million square feet of new store space, with 80% of this outside the UK.
The first stores opened in November and there are now 60 stores trading on the West Coast.
However, last month it was revealed that its expansion plans for the chain had been put on hold temporarily.
There was speculation that the delay was because the Fresh & Easy chain was underperforming, but speaking to the BBC Mr Leahy denied this was the case.
"We were always going to have a pause," he said, but added that US customers liked the "strong prices, high quality and neighbourhood shopping" and that its reception "boded well for future expansion".