Supermarket giant Tesco has succeeded in fighting back both the credit crunch and discount supermarkets Aldi and Lidl by achieving 6.7% rise in group’s UK like-for-like sales in 26 weeks leading up to August. The company also registered a 10% jump in first-half profits.
The like-for-like sales picked up in summer though non-food sales declined sharply. Tesco was among the few FTSE 100 companies whose shares rose by 2.9p to 372.8p in the early trading on Tuesday. Tesco raised its interim dividend to 3.57p a share, a rise of 11.6%
Tesco had been facing serious a challenge from discounters Aldi and Lidl, which have become the fastest growing supermarket chains of Britain. To counter their onslaught, Tesco launched range of Value-branded cheaper products while promising to become biggest discounters in the UK market.
According to Tesco’s finance director Andrew Higginson, Tesco had been losing some of its market share to discounters, but took them seriously and started competing very aggressively in Central Europe. He informed that food sales in the UK remained solid as Tesco responded by reducing prices.
Chief executive Sir Terry Leahy claimed that some analysts were exaggerating their observation by saying that retail market was facing worst times of 30 years. He emphasised that Tesco’s business was strong, increasingly international and well placed to cope with future challenges.
The supermarket group, serving 20m shoppers a week in Britain, registered profit before tax of £1.453bn and 14% growth in sales to £28.1bn for the first half.
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