SALES AT Tesco Ireland grew 15 per cent as price reductions boosted transaction numbers and lured shoppers away from Northern Ireland.
Tesco said sales fell 7.5 per cent to €2.9 billion in the year to the end of February. However, price cuts introduced in May were responsible for a 10 per cent growth in the number of transactions, the company claimed, with customers responding to its campaign by visiting Tesco in higher numbers.
Trading at the 11 Tesco stores in Border areas rose by an average of 33 per cent year-on-year, as the appeal of cross-Border shopping waned.
Tesco Ireland chief executive Tony Keohane admitted that the lower average value of transactions by recession-struck customers meant the company was forced to adapt its business strategy.
“The past year has proved extremely challenging for customers, as the economic position has affected incomes, job security, confidence and consumer spending,” said Mr Keohane.
“The market has steadied but uncertainty around consumer confidence and spending persists. Trading continues to be intensely competitive.”
Demand for Irish products is high, the retailer said, and the sales of Tesco’s own-brand products have risen to 35 per cent of total sales, up from 32.5 per cent.
Clothing and other non-food sales enjoyed “notable growth”, the company said, while sales of alcohol “declined marginally”.
Tesco does not publish the amount of profits it makes from its Irish stores. However, the Irish market is thought to be one of the most profitable parts of its worldwide retail empire.
It is understood the company made profits of around €250 million from its Irish stores in the previous fiscal year.
Based on its target profit margin of 9.5 per cent, it would have made profits of €275 million last year.
However, subdued consumer spending and price-cutting are likely to have put pressure on margins during 2009.
Yesterday, Tesco insisted that it was meeting strong customer demand for Irish products with “continued strong stocking and promotion of Irish products” across food categories.
The Tesco group sees little risk of a dip back into recession in its main British market despite a slowdown in recent sales growth. The group, which runs more than 4,300 stores across 14 countries, announced a 5.2 per cent rise in sales to £62.5 million, meeting retail analysts’ expectations. There was an 8.9 per cent increase in group pretax profits, which grew to £3.17 billion.
“Tesco has weathered the economic storm well,” said Tesco chief executive Terry Leahy.
“Our positions in international markets and non-food meant we faced strong headwinds when the downturn came but it will be these parts of our business which will grow fastest as the recovery strengthens,” he said.
Tesco said it had “doubled” its market share in computer games, partly as a result of more space allocation to games in its stores.
