03 October 2012 10:55
Supermarket giant Tesco has reported its first fall in profits in 20 years, as a return to sales growth in the UK was offset by a downturn in Asia and Europe.
The UK's biggest grocer recorded a 12% decline in group pre-tax profits to £1.7 billion in the six months to August 25th.
There were tentative signs that the retailer's £1 billion turnaround plan in the UK was starting to have some impact as like-for-like sales excluding VAT and petrol grew 0.1% in the final three months of the period, compared with a decline of 1.5% in the first quarter. However, as UK sales improved, like-for-like sales in Asia and Europe fell into the red in the second quarter as shopping hour restrictions hit trade in South Korea and the Eurozone crisis impacted its performance on the continent.
Chief executive Philip Clarke said: "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."
The supermarket said group sales were up 1.4% to £36 billion in the half-year period, while in the UK total sales edged 2.2% higher at £23.9 million.
The UK like-for-like sales performance in the second quarter is Tesco's first positive result on this basis for six quarters and was driven by higher volumes.
Mr Clarke said profit in the UK had been lifted by the planned investment in the turnaround plan, which has seen 8,000 additional staff recruited, 230 stores refreshed in the first half and the launch of its Everyday Value range.