Tesco profits down while Sainsbury’s sales remain buoyant

2 Oct 2013
Mirror UK

Tesco’s UK takings fell by 0.5% in six months while Sainsbury’s announced a 1.4% rise in sales over a similar period

Sainsbury’s scored a victory over Tesco as its arch rival revealed a slump in profits.

Justin King, boss of Sainsbury’s, declared it was the only major ­supermarket growing its market share as it announced a 1.4% rise in sales in the six months to the end of September.

It came as Tesco confirmed its UK takings fell by another 0.5% in the 26 weeks to August 24.

However, Tesco’s ­problems aren’t confined to Britain, with sales falling in every one of the 10 countries where it operates.

The tough trading dented half-year profits, which crashed 23.5% to £1.39billion after one-off costs.

Tesco boss Philip Clarke insisted the supermarket heavyweight was reeling from wider economic weakness abroad and was fighting back at home.

That was backed up by data showing UK sales were flat in the last three months, much better than the 0.9% drop in the previous quarter.

Tesco, which still raked in a ­mind-boggling £35.6bn in sales ­worldwide over the six-month period, is revamping 8,000 own-label products including its Finest range, which is one of the country’s biggest food brands with annual sales of £1.4bn on its own.

The firm is also sprucing up stores, resulting in a 3-5% sales uplift in those branches.

Clarke said: “Our ­performance in the UK has strengthened through the half, particularly in our food business.”

Tesco has pulled out of Japan and the US and today announced a deal with China’s largest retailer to merge their operations in the country. ­

Meanwhile Sainsbury’s enjoyed a 2% jump in sales in the last 16 weeks.

Like Tesco, it is investing heavily in its own-label range which grew at twice the rate of branded goods over the quarter.

Online sales increased by 15% and are now worth £1bn a year.

Sainsbury’s convenience store ­business posted a 20% surge.

King said: “We have delivered strong sales over the quarter, continuing to outperform the market in what remains a tough retail environment.”

Analysts say Tesco’s Clarke has a big job on his hands.

John Ibbotson, director of retail consultants Retail Vision, said: “As soon as one leak is plugged, another opens up.”