Tesco Ireland reports sales of €3.1bn

Tesco Ireland has reported a 5.2 per cent increase in sales revenues to €3.15 billion for the year to the end of February.

Over the period the retailer opened 16 new stores. If the impact of these additional sales is stripped out, like-for-like sales were down 4.2 per cent over the period “reflecting the significant slowdown in economic activity and consumer spending during the final quarter of the year", the company said in a statement.

Tesco Ireland is the largest retailer in the State with 116 stores in the State as well as 15 petrol stations. It employs 13,500 people.

As per usual it did not provide profit figures for its Irish division. Tesco profit data are included as part of the group’s international business arm.

Tony Keohane, chief executive of Tesco Ireland, said 2008 had been a "challenging" year and said the company was cutting prices in response to falling demand.

Tesco said a combination of tight cost control and more international buying meant its Irish operations had reported a solid performance despite trading conditions worsening in recent months.

Over the last year the retailer also noted a steep rise in cross-Border shopping and it estimates 4 per cent of the grocery market has moved to the North.

Based on an estimate in 2008 of €12 billion for the overall value of the Irish grocery market, this would suggest approximately €480 million is now being spent in the North.

Tesco does not have outlets in all the main Border towns in Northern Ireland visited by shoppers from the Republic and as a result does not recoup sales lost from the Republic in its 40 outlets in the North.

Despite falling demand Tesco Ireland said sales of clothing rose 45 per cent last year while sales of core grocery, meat, fish and bakery products also increased.

Among the categories reporting a decline in sales were beers, wines and spirits.

The company is planning two replacement stories at Douglas, Cork and Ballinasloe, Co Galway this year. Staff at the former have served notice of industrial action on the company due to proposed changes in conditions.

Its parent Tesco Group today showed its resilience to the economic downturn by posting a 10 per cent rise in underlying annual profit to £3.128 billion.

The supermarket group, which employs 440,000 people in about 4,000 stores across 14 countries, also said this morning it had made a good start to its 2009 and 2010 year during which it planned to add 26,000 jobs and over 8 million square feet of new space.

Tesco's sales rose 15.1 per cent to £59.4 billion in the 53 weeks to end-February. Its dividend was raised 9.7 per cent to 11.96 pence.

Tesco said it planned to cut capital expenditure to around £3.5 billion this year.

Net debt jumped to £9.6 billion to pay for an acquisition in South Korea and a deal to buy Royal bank of Scotland out of the a financial services joint venture.

Tesco said its fledgling US business made a trading loss of £123 million on a constant currency basis, worse than its guidance.

Chief executive Terry Leahy said he remained "absolutely" committed to the US business although it was impossible to say when it would break even.

Additional reporting Reuters