Tesco chief executive Philip Clarke today pledged that the supermarket would work to become “the best multichannel retailer for customers.”
The pledge came as Tesco announced its first fall in annual profits for almost 20 years, but as it showed online sales surpassing £3bn for the first time, following growth of 13%.
In the year to February 23, the company unveiled group sales up by 1.3% to £72.4bn, but pre-tax profits fell by 51.5% to £1.96bn. Tesco said it would pull out of the United States, exiting the Fresh and Easy operation at a cost of £1.2bn to profits, and would also shelve planned new developments in the UK.
Instead, the company is to focus investment on the UK market, while also growing its international business and “establishing multichannel leadership in all of our markets.”
Philip Clarke, chief executive, said: “The announcements made today are natural consequences of the strategic changes we first began over a year ago and which conclude today. With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers.
“Our plan to Build a Better Tesco is on track and I am pleased with the real progress in the UK. We have already made substantial improvements to our customers’ shopping experience, which are starting to be reflected in a better performance.”
He added: “Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns.”
In the UK, total sales grew by 1.8% to £48.2bn, with trading profit down by 8.3% to £2.3bn. Like-for-like sales for the full-year fell by 1%, including VAT and including petrol.
The company is currently a year into a £1bn UK Tesco transformation plan which includes a focus on clicks and bricks. In the full year, Tesco’s online grocery business grew by 12.8% to £2.3bn. It now has more than 150 grocery click and collect points, and plans to more than double that in the year ahead. More than 120,000 have signed up for its Delivery Saver subscription service, which now accounts for almost a quarter of weekly online grocery sales. It opened its fifth dotcom-only store in January and will open another in Erith, serving the London area later in the year.
Meanwhile, Tesco’s non-food online service, Tesco Direct , has expanded its product range to nearly 300,000 products from 75,000 at the start of the year. About two-thirds of Tesco Direct orders are collected in-store, the supermarket said today, with the number of Click & Collect location now doubled to more than 1,500, compared to the same time last year.
“Tesco Direct is a key part of our multichannel strategy going forward,” said the full-year statement, “but its path to profitability has progressed less quickly than anticipated. It is a clear priority for the year ahead – and the one which is receiving most of our focus in this area – to ensure that we have a profitable, scalable model before we look to accelerate growth.”
