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| Tesco reports sharp drop in profits | Tesco reports sharp drop in profits |
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| The UK's biggest supermarket chain, Tesco, has reported a 23.5% drop in profits during the first half of its financial year. | The UK's biggest supermarket chain, Tesco, has reported a 23.5% drop in profits during the first half of its financial year. |
| Tesco's pre-tax profits in the six months to 24 August were £1.39bn, with total UK sales rising 1.5% to £1.13bn. | Tesco's pre-tax profits in the six months to 24 August were £1.39bn, with total UK sales rising 1.5% to £1.13bn. |
| However, UK like-for-like sales - which strip out the impact of new stores - fell by 0.5%. | However, UK like-for-like sales - which strip out the impact of new stores - fell by 0.5%. |
| Rival Sainsbury's reported a 2% rise in like-for-like sales during the second quarter of its financial year. | Rival Sainsbury's reported a 2% rise in like-for-like sales during the second quarter of its financial year. |
| 'Making progress' | 'Making progress' |
| Tesco said it had seen a challenging retail environment in Europe, where profits fell 67% to £55m. | Tesco said it had seen a challenging retail environment in Europe, where profits fell 67% to £55m. |
| It also saw margins being squeezed, in what is already a notoriously competitive retail environment. | |
| Profit margins fell from 5.4% to 4.9% over the period. | |
| The firm's chief executive, Philip Clarke, said Tesco was making progress and was strengthening its UK business, but he saw little improvement in consumers' spending power. | |
| "There is less pessimism around, but customers are still not seeing real disposable incomes improve," he told the BBC's Today Programme. | |
| "They are, perhaps, feeling a little better about the future," he added. | |
| Tesco's results came as the firm announced a joint venture with China Resource Enterprises (CRE) , | Tesco's results came as the firm announced a joint venture with China Resource Enterprises (CRE) , |
| The UK firm will combine its Tesco China business, which includes 134 Chinese stores, with the 2,986 stores held by CRE's Vanguard business. | The UK firm will combine its Tesco China business, which includes 134 Chinese stores, with the 2,986 stores held by CRE's Vanguard business. |
| Tesco will have a 20% stake in the business, which it said would have sales approaching £10bn. | Tesco will have a 20% stake in the business, which it said would have sales approaching £10bn. |