Tesco achieves £3bn annual profit

The supermarket chain Tesco has reported underlying annual pre-tax profits of £3.13bn, an improvement of 10% on the previous year.

Its sales topped £1bn a week for the first time with group sales coming in at £59.4bn.

The profits are the highest on record for a UK retailer.

The boss of Tesco said that he was confident the retailer would "continue to make good progress even in the current global economic environment".



The underlying figure excludes factors including certain aspects of pension costs and changes in rent.

If such factors are included, group pre-tax profit came in at £2.95bn.

Losing share

Tesco said in its statement that in the UK it had "coped well with recovering competitors and a difficult non-food market" and had managed to increase both the number of customers coming into its stores and the average amount they were spending.

However, chief executive Terry Leahy conceded in an interview with BBC News that he was losing some market share to other retailers such as Morrisons.

Tesco said like-for-like sales - which strip out the impact of new store openings - excluding petrol in the UK grew 3% in the year to 28 February.

By comparison, Morrisons reported full year like-for-like sales growth excluding petrol of 7.9%.

Tesco described its start to the current year as "solid" with like-for-like sales excluding petrol in the past six weeks growing by 3.4%.

The number of plastic bags used during the year fell by 50%, while the retailer said that a quarter of its transactions went through its self-service checkouts.

'Old-fashioned bank'

In the UK, Tesco is planning to expand its banking business, including launching a current account, having bought out Royal Bank of Scotland's stake in their joint venture.

Mr Leahy said Tesco Personal Finance would be an "old-fashioned bank dealing mainly with Tesco customers who we know".

On the outlook for the UK, Mr Leahy said, "It looks as if the consumer is stabilising at least, so you're not seeing the situation worsening."

"I think it's too early to forecast when an upturn will come."

Tesco reported a trading loss of £142m from its US Fresh & Easy business, excluding the effects of currency fluctuations, which was worse than had been expected.

Mr Leahy said he was still committed to the business, but that it was impossible to say when it would break even.