UK supermarket giant Tesco says profit dives by third

Tesco, Britain’s biggest retailer, said yesterday its purchase of wholesaler Booker helped support its underlying performance although first-half net profits sank as the supermarket group had booked an exceptional gain last year, reports AFP from London.

Profit after tax slumped 32 per cent to £426 million ($553 million, 479 million euros) in the six months to the end of August, Tesco said in a results statement.

That compared with £628 million in the same part

of the previous year, which was boosted partly by a large

gain on the sale of its Korean operations.

Tesco added that its latest underlying operating profit jumped 24 percent to £933 million, helped greatly by the recent acquisition of British wholesaler Booker.

However this figure undershot analysts’ consensus forecast, contributing to Tesco’s share price tanking 8.3 percent to 215.70 pence on London’s benchmark FTSE 100 index, which was up 0.4 percent overall.

“Tesco’s Central European operations suffered a setback as trading restrictions on Sundays and public holidays reduced the number of days its stores could open for business in Poland and Slovakia,” noted Laith Khalaf, senior analyst at Hargreaves Lansdown.

“It’s commonly thought that Sunday trading restrictions displace rather than deter consumer activity, but Tesco’s experience suggests otherwise, for the big supermarkets at least.

“The Central European business makes up just over 10 percent of group sales, so Tesco can probably take this one on the chin while its UK business is ticking along so nicely,” Khalaf added.

Sales on a like-for-like basis, which strips out the impact of new floor space, climbed 2.3 percent in the second quarter.

“We have made a good start to the year,” chief executive Dave Lewis said in the earnings release.

 

UK supermarket giant Tesco says profit dives by third

Tesco, Britains biggest retailer, said yesterday its purchase of wholesaler Booker helped support its underlying performance although first-half net profits sank as the supermarket group had booked an exceptional gain last year, reports AFP from London. Profit after tax slumped 32 per cent to 426 million ($553 million, 479 million euros) in the six months to the end of August, Tesco said in a results statement. That compared with 628 million in the same part of the previous year, which was boosted partly by a large gain on the sale of its Korean operations. Tesco added that its latest underlying operating profit jumped 24 percent to 933 million, helped greatly by the recent acquisition of British wholesaler Booker. However this figure undershot analysts consensus forecast, contributing to Tescos share price tanking 8.3 percent to 215.70 pence on Londons benchmark FTSE 100 index, which was up 0.4 percent overall. Tescos Central European operations suffered a setback as trading restrictions on Sundays and public holidays reduced the number of days its stores could open for business in Poland and Slovakia, noted Laith Khalaf, senior analyst at Hargreaves Lansdown. Its commonly thought that Sunday trading restrictions displace rather than deter consumer activity, but Tescos experience suggests otherwise, for the big supermarkets at least. The Central European business makes up just over 10 percent of group sales, so Tesco can probably take this one on the chin while its UK business is ticking along so nicely, Khalaf added. Sales on a like-for-like basis, which strips out the impact of new floor space, climbed 2.3 percent in the second quarter. We have made a good start to the year, chief executive Dave Lewis said in the earnings release.