If the company can do this in challenging times, just imagine what it could do when things are good?
Tesco revealed its profits for the year just gone yesterday, and they were up 17% to £2.25bn and yet its boss Terry Leahy described the period as a “challenging year.”
Like for like sales in the UK were up 7.5%
Tesco, might be a giant in the UK, with its sales accounting for 3% of GDP, but worldwide Wal-Mart and Carrefour of France are bigger. In fact the UK accounted for 79% of sales last year, with Asia having 10% and Europe making up the rest.
But, overseas the company is growing. The retailer opened 238 new stores overseas last year and plans a further 419 international store openings in the current year. It’s moving in on the US market, with a convenience store business, and states side, the press have been describing the Tesco move as a threat to the dominance of Wal Mart.
Tesco is raising £5bn from the sale and lease back of land holdings, and while some of this will be spent on share buybacks there will have plenty of cash in the coffers to ramp up its oversees push.
The company has also announced a £100mn environment fund, to invest in projects such as wind turbines and solar panels.
But there is a cloud looming. The Competition Commission is about to kick off yet another investigation into supermarkets. And Tesco’s land bank will come under the spotlight. There’s a suspicion, that Tesco is holding billions of pounds worth of strategically positioned land, just to stop rivals from moving in on its turf. Tesco denies this, but the competition commission might well disagree
© Investment & Business News 2013