1 Oct 2008

Tesco reports steady profits rise

7:06 am on 1 October 2008

Tesco has reported a steady rise in half-year profits despite the tough retail environment.

The giant British supermarket group made group profit before tax of 1.43 billion pounds in the 26 weeks to 23 August, an 11.3% increase on the same period last year.

Group sales increased 14.1%, buoyed by robust international sales which were up by 26.8%.

Excluding petrol, like-for-like sales - which strip out the impact of new stores - were up 3.7% in UK stores.

Like-for-like sales grew 4% in the second quarter, an increase from growth of 3.5% in the first quarter.

Chief executive Terry Leahy said Tesco was "at its best in tough markets" and could respond to the changing needs of customers.

Tesco dominates the supermarket sector in Britain.

However, the credit crunch and tighter household budgets have meant cheaper alternatives such as Lidl, Aldi and Asda have been eating away at its UK market share, which currently stands at more than 30%.

Tesco has responded by releasing a new range of some 400 low-cost products last week in order to maintain its position in the market.

It expects growth in European and Asian markets to carry the group through the difficult trading period.

Tesco serves more than 20 million customers every week.