TESCO chief executive Philip Clarke insisted that the group’s £1bn turnaround plan was paying off, yesterday, stressing “it was just the beginning” despite the group suffering its first profit fall in nearly 20 years.
Although half-year profits fell 10.5 per cent to £1.6bn due to the cost of the recovery plan, Clarke highlighted that the group had delivered its first positive quarter in 18 months.
Sales at UK stores open more than a year rose by 0.1 per cent in the 13 weeks to 25 August, excluding fuel and VAT – a significant improvement from a 1.5 per cent fall in the first quarter of the year.
“This is only the start of a long journey and we are just a few steps into building a better Tesco,” Clarke said.
In the five months since Clarke launched his fightback, the firm has recruited 8,000 more staff at its 3,000 UK stores, devoted more store space to food, given stores a warmer look and revamped food ranges.
It has spent more on money-off vouchers and marketing that uses data gleaned from its Clubcard scheme, and launched its click and collect service that lets online shoppers collect orders at the store.
Despite improvements in the UK, the supermarket is grappling with problems overseas. Trading profit in Europe fell 28 per cent to £171 in the half year and Clarke said “the chilling winds” of the Eurozone crisis are reaching eastern Europe.
Tesco’s US Fresh & Easy business narrowed its losses in the half year by 1.4 per cent to £74m. Clarke insisted he was committed to its future and said he was “determined to get value for shareholders”. Tesco plans to open fewer stores and focus on getting existing stores back to profitability.