Tesco sales pick up overseas

City A.M. Reporter
TESCO, the world’s third biggest retailer, has seen a pick up in sales growth in South Korea, its biggest market outside Britain, as well as rising sales in China, Thailand, Malaysia and India, it said yesterday.

The supermarket group, on the first day of a trip to Asia with analysts, also said returns in Asia and mainland Europe would reverse their recent decline as economic recovery takes hold and its assets mature, and that it expects to open its first cash and carry in India in May next year.

Tesco, with over 5,000 stores across 14 countries, makes about 70 per cent of sales and over three-quarters of its profits in Britain. But its overseas markets are growing strongly, with more than half of the profit growth achieved in the six months to August 28 coming from Asia and continental Europe.

In presentation slides published on its website, the group said sales at stores open over a year rose 6.7 percent in South Korea in the nine weeks to October 31, up from 6 per cent in the second quarter.

Like-for-like sales in China and Thailand were up 8.3 per cent and 3.4 per cent in the same period, down from 9.3 per cent and 4.8 per cent growth respectively in the second quarter, while underlying sales in Malaysia were up 0.5 percent following a second-quarter decline of two percent.

Tesco said its cash return on investment in Asia and mainland Europe fell during the recession to 11.8 per cent in 2009-10 from 13.1 per cent in 2007-8.

But it said this was back on a rising trend.

“International returns will improve from economic recovery in the short term and maturity of assets in the long term,” it said, pointing out that returns in its leading international businesses (Ireland, Hungary, South Korea, Thailand) were up 14.7 per cent, and up 16.9 per cent at stores over four years old.