26 weeks ended 25 August 2012
IMPLEMENTING THE PLAN – INVESTING IN A BETTER TESCO
Group sales up 1.4% to £36.0bn* (up 3.2% at constant rates); Group sales exc. petrol up 1.6% (up 3.7% at constant rates)
Statutory profit before tax down (11.6)% to £1.7bn; Underlying profit before tax down (8.5)% to £1.8bn
Group trading profit of £1.6bn, down (10.5)% – UK down (12.4)% to £1.1bn; International down (17.1)% to £0.4bn; Tesco Bank up 114% to £94m
Underlying diluted EPS reduction of (7.9)%**
Interim dividend per share maintained at 4.63p
Group capital expenditure brought down from £2.1bn to £1.6bn; on track for a full year reduction to c.£3.2bn
UK plan implementation underway, with improvements in UK sales performance, including like-forlike sales growth in second quarter
Reduced new UK space programme on track; greater focus on Express, with 60 new stores in H1
Grocery online business continues to outperform, growing by 11% in the UK; dotcom now launched in Poland and Slovakia, with Thailand and Malaysia launching soon
Tesco Bank migration successfully completed onto new, modern platforms; mortgages launched
Majority of businesses in Asia and Europe gained or held share, in tough external environment
United States losses reduced slightly to £(72)m at constant rates; actions taken to reduce losses further in the second half
Successful property transactions completed in Thailand and Korea, raising c.£700m proceeds
Japanese market exit deal agreed with Aeon
UK Plan – Building a Better Tesco:
Our £1bn investment programme to improve the shopping trip for customers is on schedule, with tangible improvements in all elements of the plan:
1. Service & Staff – second phase now complete; total of 8,000 additional staff now in store 2. Stores & Formats – over 230 stores refreshed in first half; c.40% reduction in full-year new space growth confirmed; started process of reallocating space within existing stores 3. Price & Value – increased use of personalised Clubcard offers starting to deliver results 4. Range & Quality – successful Everyday Value launch; over 2,000 core Tesco products also upgraded so far
5. Brand & Marketing – store-specific ranging work underway; new creative agency W+K in place; new marketing campaign launching before the end of the year 6. Clicks & Bricks – Click & Collect rolled out to over 1,300 locations; 200,000 non-food product lines now available online
Philip Clarke – Chief Executive
“We continue to act decisively to tackle challenges and seize opportunities across the Group. In April, I set out our plans to 'Build a Better Tesco' in the UK. We have been hard at work and I am encouraged by our customers’ initial responses to the changes we have made – but there is much more to be done. I am pleased that the team is in place, highly focused and energised, and I want to thank them for everything they have done.
“The external environment continues to present challenges all over the world. Whilst our businesses in Asia and Europe have continued to do a great job for customers, our financial performance there reflects the tough economic backdrop and particularly the regulatory changes in South Korea. That we have gained or held market share in the majority of markets is a testimony to the skill of our teams across the Group.
“We have made some important strategic changes which have fundamentally altered our approach to capital allocation. First, significantly reducing space growth in the UK and focusing on improving the performance of our existing stores – and second, investing in online to enable Tesco to take a leadership role in the digital revolution: playing our part in shaping the future of retailing. “It is in serving the changing needs of customers, as Tesco has done over many years, that we will create more value for shareholders."
*Group sales (inc. VAT) exclude the accounting...