Tesco’s profit plunges 25%, while Sainsbury’s is on the up

Tesco, Britain’s biggest retailer has suffered a 24.5% fall in first half statutory pre-tax profits down to £1.39bn.

The supermarket chain has seen like-for-like sales tumble in all ten of its international businesses, with weak demand across Europe and restrictions on opening hours in South Korea having a pronounced effect.

In the UK, like-for-like sales fell by 0.5%, including a 0.9% drop in the first quarter. In Thailand, sales fell by 4.7% and by 3.7% in South Korea, the firm’s biggest markets outside Britain.

Tesco chief executive Philip Clarke said: “The challenging retail environment in Europe has continued to affect the performance and profitability of our businesses there.”

The results come as rival supermarket Sainsbury’s reported a 2.1% rise in second quarter sales compared to the same period last year.

Sainsbury’s chief executive Justin King said that the chain’s convenience business grew by 20% while its general merchandise and clothing arm had grown at more than twice the rate of its food sales.

Chinese investment

In a separate announcement alongside the firm’s results, Tesco confirmed that it has agreed a joint venture in China with China Resources Enterprise (CRE).

The move will affect 134 stores in China and Tesco will pump in around £185m to the joint venture and pay £160m over the next two years to CRE.

The UK company will take a 20% stake in the business.

 

 

 

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