Tesco Plc, the world's third-biggest food retailer, reported a record 2.8 billion pound ($5.5 billion) annual profit on Tuesday and said it had made a strong start to its new financial year, driving up its shares.
Britain's biggest retailer, moving to knock down a rash of negative speculation about its business in recent weeks, added a market-pleasing property deal and revealed that sales at its nascent US venture "Fresh & Easy" were ahead of budget.
Chief Executive Terry Leahy also unusually provided a growth forecast of 3 to 4 percent for the full year 2008/2009. "Tesco have come storming back after all the recent criticism, with strong vibes about trading both in the UK and the United States and their up-to-date property valuation," Pali International analyst Nick Bubb said in a note.
Tesco, which has a more than 30 percent share of the grocery market in Britain, double that of its nearest rivals Asda and J. Sainsbury, said trading profit rose to 2.75 billion pounds in the 52 weeks to February 23, led by strong growth in its international and online businesses.
Like-for-like sales, excluding fuel, in Tesco's core UK market rose 3.5 percent, and were up over 4 percent in the first five weeks of its new financial year. This was slower than the 4.1 percent growth seen in the third quarter, however. Sales from its international operations - spanning 12 countries from China to Thailand, Turkey and the United States, the world's toughest consumer market - also grew strongly, rising 22.5 percent at constant exchange rates.
In the United States, where it now has 60 stores after launching last November, sales were ahead of budget and sales densities were higher than the US supermarket average with the best stores exceeding $20 per square foot, Tesco said.
But with Tesco aiming for a total of 200 stores open by the end of this financial year, US trading losses are set to widen to 100 million pounds from 62 million pounds last year, the company said.
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