SALES AT Tesco Ireland stores open for at least a year fell 3.4 per cent in the six months to the end of August, as its UK parent Tesco plc said the Irish market was “still struggling to recover”.
However, total Irish sales grew to 2.6 per cent to €1.5 billion in the period as the company upgraded three stores to superstores and opened three Express convenience stores.
Tesco, which takes more than one in every four euro spent on groceries in Ireland, said the like-for-like sales decline was the result of food price deflation and lower consumer spending, particularly on non-food products.
The drop in like-for-like sales moderated to 3 per cent in the second quarter after a 3.9 per cent fall in the first quarter.
“Irish consumers are adapting to changed economic circumstances, but are still feeling the strain of reduced incomes and uncertainty about the future,” said Tesco Ireland chief executive Tony Keohane.
“We do not see any immediate uplift in domestic economic trends, but we believe the worst may well be behind Ireland.”
The number of transactions increased by 5.2 per cent in the period. There was also a 20 per cent rise in online shopping sales, which are understood to be worth about €50 million per annum.
Tesco now has a 27.9 per cent share of the Irish grocery market, up 2 per cent on a year earlier, according to the latest figures from research firm Kantar Worldpanel. This has furthered its lead over the second-largest multiple, Dunnes, which has a 22.9 per cent share, up 0.6 per cent.
Tesco opened superstores at Balbriggan, Co Dublin; Roscrea, Co Tipperary; and Portlaoise, Co Laois, as part of a €120 million investment programme this year. New superstores are under construction at Cabra and Rush, Co Dublin, and at Kildare.
Tesco plc yesterday highlighted Ireland and Hungary as the two international markets where austerity economic policies were preventing significant expansion.
“Given the current economic conditions in Ireland and Hungary we intend to pursue a low rate of new space growth there until the outlook, and therefore the prospects for incremental returns, improve,” it said in a statement.
The group announced its worst quarterly sales performance in the UK in at least six years, with a 0.9 per cent drop in like-for-like sales in the second quarter. Over a six-month period, like-for-like UK sales – which excludes stores and floor space added in the last year – fell 0.5 per cent. The company has suffered more than rival supermarkets in its home market because it sells a larger proportion of discretionary (non-food) goods.
On a global basis, sales rose 8.8 per cent to £35.5 billion, with pretax profit climbing 6.2 per cent to £1.9 billion, as a result of “excellent growth” in Europe and Asia.
Tesco chief executive Philip Clarke said it would be a “big next six months” for its loss-making US business Fresh Easy, on which it hopes to break even in its 2012-2013 financial year. He also described Tesco’s exit from the Japanese market as a “difficult” decision, but said it would never have achieved the scale required to deliver an adequate return.
