In his first trading update since taking over from Sir Terry Leahy as Tesco CEO, Philip Clarke says the UK business missed its planned growth targets for the year and “can do better”.
Like for like sales in the UK, which strip out new stores and space fell 0.7% in the final quarter and were flat for the year.
He warns that the UK market remains subdued as consumers face higher taxes, public sector cuts and rising fuel costs and outlined six objectives to drive the business that Tesco will report on directly in all future trading updates.
Clarke says: “We didn’t achieve our planned growth in the year and this was only partly attributable to the deterioration in the consumer environment during the second half. We can do better and we are taking action in key areas – for example, to drive a faster rate of product innovation and to improve the sharpness of our communication to customers.”
Tesco reported group sales were up 8.1% to £67.6bn and a 12.3% increase in pre-tax profit to £3.8bn for the 52 weeks to 26 February.
Tesco’s operations in Asia and Europe contributing nearly 70% of the group’s profit growth in the year but Clarke admits its Fresh and Easy chain in the US “still has some way to go.”
He sounded a note of optimism for an “improving global economic environment”.
Clarke’s six objectives are:
- Keeping the UK strong and growing
- Becoming outstanding internationally
- Becoming a multi-channel retailer wherever Tesco trades
- Delivering on the potential of retailing services such as Tesco Bank
- Applying group skill and scale to deliver more value and increase competitive advantage
- Deliver higher return for shareholders