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Tesco announces record £3bn annual profit

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by Kay Mitchell

Supermarket giant Tesco has announced a pre-tax profit of £3.13 billion – the highest ever full-year earnings reported by a UK retailer.

The UK‘s largest supermarket, with a 30% share of the market, said the current year had started “solid” with like-for-like sales (stripping out petrol) in the past six weeks rose by 3.4%.

The group added that plastic bag usage had halved, while 25% of its transactions now used the self-service checkouts.

Tesco’s chief executive Sir Terry Leahy said: “At a time when customers everywhere are feeling the economic strain, we are responding to their changing needs in all our markets by lowering prices, introducing more affordable products and offering even sharper promotions.”

However, in an interview with BBC News, Mr Leahy admitted that the group was losing market share to other major retailers, in particular Morrisons.

In the meantime, Tesco’s US venture, Fresh & Easy is abandoning plans to expand after it made a trading loss of £142 million.

Its first US convenience store opened in October 2007 with plans for major expansion on the west coast but the current economic climate means the supermarket giant continues to rack up losses.

Back in the UK however, Tesco recently announced that it is planning to compete with High Street banks by opening bank branches in 30 of its stores by the end of the year.

The branches are expected to be called ‘Tesco Bank’ and the supermarket hopes to take advantage of the lack of confidence in existing banks by attracting disillusioned customers.

Tesco already offers credit cards, savings accounts and insurance via its Tesco Personal Finance (TPF) brand and announced plans late last year that it could be offering mortgages later this year.

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News posted: April 21, 2009

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