Tesco has revealed a slip in UK profits today, in part blaming aggressive discounting from rival retailers.
While the firm's overall profits were up, with group pre-tax profits rising 5.3 per cent to £3.8bn in the year to February 25th (and some might think that would be enough - but it never is for shareholders), profits in the UK dipped one per cent to £2.5bn. UK sales fell by 1.2 per cent in the second half of the financial year.
"Whilst our international business is delivering excellent growth, contributing £1.1 billion of profit to the group, we fully recognise that we need to raise our game in the UK," said chief executive Philip Clarke.
He told the BBC: "Tesco didn't put enough into the stores and maybe took a little out".
It will now invest £1bn into the UK business, revamping stores and hiring up to 8,000 new staff.
Retail consulting firm Kantar Retail said: “Tesco’s news about declining UK profit and like-for-like sales has not come as a surprise. There has been a clear lack of investment in stores and staff for the last couple of years, and the retailer now trails several competitors in terms of fresh food offer, customer service, and in-store standards.
“It is a daunting challenge to turn around Tesco’s fortunes in the UK, but the plans Philip Clarke announced today are likely to help the market leader get back on track. However, those expecting an overnight recovery will be disappointed. It only takes one shopping trip to disappoint a customer, but it takes much longer to change perceptions and regain shoppers’ trust.
“Despite Tesco’s underperformance, Kantar Retail urges a greater sense of perspective. Tesco is not on its knees, just off the boil."