Tesco posts strong results amid downturn
Supermarket giant Tesco has today announced a 1.5% rise in pre-tax profits for the half year to the end of August and has bucked the trend by creating 6,500 jobs in the period.
Tesco, which has a 30% share of the grocery market, said pre-tax profits were £1.42 billion – up 1.5% compared with the same period last year.
Group sales were up 8.3% to £30.4 billion while like-for-like sales in the UK, which strips out new store openings, grew 2.7%.
However, while the supermarket’s performance overall was not as strong as its competitors, chief executive Sir Terry Leahy said group is “well-placed for the global recovery”.
At the onset of the recession, the retailing giant saw its monopoly of the grocery market come under threat as rivals started to offer lower prices to attract customers.
Meanwhile, last month Tesco continued with its expansion into financial services by agreeing a partnership with Fortis.
The joint venture will form a new motor and household insurance company.
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.
The supermarket hopes to take advantage of the lack of confidence in existing banks by attracting disillusioned customers.
The joint venture, to be called Tesco Insurance Limited, will create over 1,500 jobs in the UK with both companies investing £100 million each in the new partnership, which will be owned 49.9% by Tesco and 50.1% by Fortis.