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Tesco profits take a tumble

Tesco profits take a tumble
Photo: Tesco

Tesco has announced a fall in pre-tax profits of nearly 20% in the past year to £825 million, due to costs rising by almost £900 million due to the pandemic, reports Retail Gazette. The major increase in sales during the past 12 months was not enough to offset the spiralling extra overheads. Tesco hired almost 50,000 temporary workers during the pandemic, about 20,000 of whom have joined the retailer permanently.

Tesco said group sales excluding fuel increased by 7% to £53.4 billion for the year to February, driven by soaring online sales. In its core UK and Ireland market, Tesco’s full-year sales were up 8.6% to £48.8 billion. Online sales jumped by 77% to £6.3 billion in the UK.

Tesco chief executive Ken Murphy said: “Tesco has shown incredible strength and agility throughout the pandemic. By putting our customers and colleagues first, we have built a stronger business.”

 

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Tesco calls on retailers to take collective action against climate change

Tesco calls on retailers to take collective action against climate change
Photo: Tesco

Tesco has outlined its climate manifesto containing five key areas of focus, including cutting absolute emissions from energy and supporting the UK’s transition to electric transport, as well as tackling food waste, supporting the sustainable production of food, and helping customers eat healthy, sustainable diets.

Tesco chief executive Ken Murphy highlighted the need for both efficiency improvements and “cutting-edge” innovation if the retailer is to meet its climate change targets.

In 2017, Tesco committed to science-based climate targets on a 1.5-degree trajectory and aims to reach its net zero climate target in the UK by 2035, fifteen years earlier than originally planned. Through a combination of efficiency improvements and switch to low-carbon innovation, Tesco delivered a 50% emissions reduction last year on a 2015 baseline, beating its 2020 science-based target of 35%.

Murphy has now called on the wider food industry to play its part to deliver against the UK’s climate ambitions. “In this critical decade for tackling climate change, it’s vital we challenge ourselves to be more ambitious in our aims and accelerate progress against them. At Tesco, we’re playing our part by creating a better basket for our customers and the planet. No one business can tackle these challenges alone. We must take collective action as a food industry to drive the transformational changes necessary to meet the UK’s climate commitments,” he said.

Tesco has pledged to continue its work to reduce emissions in its own operations, including switching to renewable energy across all its operations by 2030, partnering with renewable energy investors to launch new renewable power generation projects, and launch its first fleet of 30 electric home delivery vans, switching to a fully electric delivery fleet by 2028. Tesco is also rolling out 2,400 charging points for customers across 600 stores, with 400 stores already fitted with the chargers. By the time the programme has concluded, Tesco will have boosted the UK’s electric charging network by 14%.

 

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Tesco commits to selling more healthy food

Tesco commits to selling more healthy food
Photo: tescoplc.com

UK retailer Tesco has announced plans to make more healthy and sustainable food available at its stores. With its direct competitors, Sainsbury’s and Marks & Spencer, having made similar commitments in recent times, the pressure is on Tesco to do likewise to address the UK’s obesity crisis. The move is being proposed by a shareholders’ group within Tesco and will be proposed at the next shareholders’ meeting. If passed, Tesco will have to disclose more about its share of sales of healthier foods and publish annual updates on how it improves.

Ignacio Vázquez, senior manager at ShareAction, stated that “As the UK’s largest food retailer, Tesco’s actions are of great importance in combating obesity. But its privileged position in the market has not yet translated into leadership in this area. We hope that the Tesco board supports the resolution and seizes the opportunity to help build a healthier post-Covid UK, while improving its long-term financial sustainability.”

Sponsors of the measure include Robeco Institutional Asset Management, JO Hambro Capital Management’s UK Dynamic Fund, and Epworth Investment Management, owned by the Central Finance Board of the Methodist Church. Together, they manage £ 140 billion in funds.

A Tesco spokesperson spoke to the BBC and explained that “we are working hard to make it easier for our customers to make healthy choices, and we have set very clear goals on health and sustainability, published in our Small Grants Plan. We have already eliminated more than 50,000 million calories from their products since 2018.” And that they have carried out a series of promotional activities in their supermarkets offering healthy alternatives and giving more than 100 million fruit to children. “We also have the goal of increasing sales of plant-based meat alternatives by 300% by 2025.”

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Tesco continues sell-off of Asian assets

Tesco continues sell-off of Asian assets © Irish Times
Tesco chief executive Ken Murphy © Irish Times

 

UK retailer Tesco has announced it will complete the £8 billion sale of its Thai and Malaysian business to CP Retail Development Company. The purchase was approved by Thai authorities last month and CP Group has now confirmed it is satisfied with the formal notice of approval. The deal should be formally completed by December 18th.

Tesco chief executive Ken Murphy said, “I would like to thank all our colleagues in Asia for their hard work and dedication to our customers over many years. They have built a very strong business. I’m confident that the agreement with CP Group will ensure that they are well setup for continued success. This sale allows us to focus on our businesses across Europe and to continue delivering for customers, make a significant contribution to our pension deficit and return value to shareholders.” 

Tesco has sold off a series of overseas assets since 2014, including Homeplus in South Korea and the retailer’s Poland operations earlier this year. Tesco continues to operate stores in Central Europe across Hungary, the Czech Republic and Slovakia.

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Tesco to return money meant to support struggling retailers

Tesco to return money meant to support struggling retailers © David Lally, licensed under Creative Commons Licence

© David Lally

 

UK retailer Tesco has promised to pay back the £585 million it saved from a business rates holiday aimed at helping struggling retailers cope with the Covid-19 crisis. Tesco’s chairman, John Allan, said that the retailer was conscious of its responsibilities to society and that the Big 4 giant did not need the saving due to remaining open and trading strongly throughout the pandemic.

The decision comes as supermarkets face growing calls to hand back the savings which were aimed at helping retailers that were unable to open and struggling to make ends meet.

Data compiled last month by real estate adviser Altus Group projected that the UK’s four largest grocers – Tesco, Sainsbury’s, Asda and Morrisons – and German rivals Aldi and Lidl would save around £1.87 billion as a result of the rates holiday.

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Tesco pays out £315 million in dividends to shareholders as sales boom

Tesco pays out £315 million in dividends to shareholders as sales boom © Réussir Fruits et Légumes
© Réussir Fruits et Légumes

 

UK retailer Tesco has posted a 29% rise in pre-tax profits to £551 million, with sales totalling £26.7 billion. Tesco reported a 4% increase in operating profits to £1.2 billion in the six months to 29th August, as booming food sales coupled with the tax break offset a £533 million bill for extra staff and safety measures in its stores.

Tesco’s UK food sales climbed more than 9% in the period as the pandemic triggered big changes in shopping behaviour. Sales in its convenience stores were up 7.6%. In large stores, sales grew by 1.4%, as customers made fewer trips but bought more on each visit. The average “basket size” – the amount spent by shoppers per visit – increased by 56%. The biggest change was Tesco’s online business, where sales grew at 90% over the summer months. The boom reflects the rapid expansion of the delivery service with the number of slots doubling to 1.5 million a week.

However, the company has come in for criticism for paying £315 million in dividends to shareholders at a time when the supermarket chain is benefiting from a business rates holiday worth £249 million. This dividend is 20% more than in 2019.

Alan Stewart, the finance director of Tesco, said the board decided that paying dividends was the “right thing to do” for shareholders. “We have incurred very, very significant extra cost in running the business in the year. It is against a backdrop of keeping people fed and supporting government initiatives against the vulnerable, that the business’s performance should be measured.”

Positive Money, a campaign group, criticised the Tesco move. Fran Boait, its chief executive, said: “There needs to be conditions to ensure that any company receiving public support in a time of crisis isn’t wasting money on paying out dividends to wealthy shareholders.”

“For Tesco to accept this relief, and then be able to turn around and pass the benefit straight on to shareholders, shows that the system is not fit for purpose – public funds should not be captured as private profit,” said senior economist Sarah Arnold.

However, the dividend decision pleased the City. Richard Hunter, head of markets at Interactive Investor, said the cash would be welcomed by investors “given the dearth of payouts at present”. “The increase is a healthy sign of confidence from the company in its prospects”.

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Tesco expands home delivery services to meet surge in demand

UK retailer Tesco has expanded its home delivery and click-and-collect services following a sharp increase in demand that led to shoppers reporting difficulties in securing online delivery slots. The firm’s delivery and collection capacity has risen from 660,000 to around 780,000 in the past two weeks, with plans to increase this by another 100,000 in the coming weeks. Tesco has also added over 200 new vans and recruited another 2,500 drivers and over 5,000 pickers, as part of the delivery expansion.

Last week, Tesco said it was limiting shoppers to only 80 items per online order. Tesco chief executive Dave Lewis said the Covid-19 pandemic has “led to unprecedented levels of demand for grocery shopping services. We’re doing everything we can to increase the number of slots available and to support vulnerable people.”

Meanwhile, online grocer Ocado announced it was recruiting an extra 3,000 staff to work in its logistics division to meet the current surge in demand.

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Tesco sells off south-east Asian operations 

Tesco sells off south-east Asian operations 

 

UK retailer Tesco is to pull out of south-east Asia, having agreed the sale of its operations to Thai conglomerate Charoen Pokphand for US$10.6 billion. This represents a major reversal of its strategy of international expansion. 

In a statement, Tesco’s chief executive, Dave Lewis, said: “Following inbound interest and a detailed strategic review of all options, we are announcing today the proposed sale of Tesco Thailand and Tesco Malaysia. This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders.” 

Tesco’s sale of its nearly 2,000 stores in Thailand and 74 in Malaysia constitutes the final stage of its exit strategy from Asia, having sold its South Korean HomePlus business in 2015. In February, Tesco announced its plans to sell its 20 per cent stake in Gain Land to China Resources, to end its activities in China.

Charoen Pokphand outbid two rival Sino-Thai conglomerates, Central Group and TCC Group. Central Group’s offer was just over US$9bn, according to people close to the deal, and TCC recently raised a $10 billion loan to finance its bid, according to Bloomberg. 

 

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Tesco to offload Asian operations?

Tesco to offload Asian operations?

Reports have emerged that leading UK retailer, Tesco, is considering selling its Asian business, Lotus, for £7.2bn. According to The Independent, Tesco has received “inbound interest” for its Lotus brand which operates over 2,000 stores and employs 60,000 people in Thailand and Malaysia. The news comes as somewhat of a shock given that Tesco has experienced sustained success in the Asian markets. However, while Lotus generated 20% of the group’s profits last year, it has faced several challenges. Nevertheless, it would undoubtedly be considered a trophy asset by a number of major investors. Financial markets responded positively to the news of the potential sale, and led to a 4% jump in Tesco’s shares. The retailer is reported to be reviewing the situation but “no decisions concerning the future of Tesco Thailand or Malaysia have been taken”.

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Tesco to remove 1 billion pieces of plastic

 

UK retailer Tesco has stapled its green credentials to its mast and laid down a challenge to its rivals by pledging to eliminate plastic in its packaging of many own-brand products. The pledge cites a commitment to remove one billion pieces of plastic from its products by the end of 2020. The initiative is part of the retailer’s commitment to its 4Rs strategy: Remove, Reduce, Reuse, Recycle.

The items that will affected by the drive include: plastic bags used to pack loose fruit, vegetables and bakery items, replacing them with paper ones; plastic trays for ready meals; secondary lids on products such as cream, yoghurts and cereals; sporks and straws for snack pots and drinks cartons; as well as 200 million pieces of plastic used to pack clothing and greetings cards.

According to a company statement: “If packaging can’t be recycled, it will have no place at Tesco.” The retailer announced that in 2019, it had removed over 4,000 tons of materials from 800 lines.