Tesco leaves Japan after fairly disappointing results

Tesco, the world’s third largest distributor, published very mixed semi-annual results yesterday. The British chain managed to grow during the last six months, but feels the constraints of the economic crisis – especially in its home market Britain.

Double figure sales rise in Europe and Asia

Tesco’s total turnover increased by 8.8% to 35.5 billion pounds (45 billion euro), especially especially because of excellent results in Europe (excluding the UK: +12.4%) and Asia (+11.7%). The British stores saw turnover rise by only 0.5%, but the total British turnover rose +7.1% if new stores are also included.

The chain’s profit rose nicely to 1.9 billion pounds (2.4 billion euro, +12.1%), causing CEO Philip Clarke to be “pleased that excellent growth in Europe and Asia, as well as an encouraging performance in the US, has supported further progress in the first half, despite the challenges of subdued demand in the UK, particularly in non-food categories”. Two thirds of the group’s profits still come from the UK, although the other markets grow considerably faster in terms of profit (UK: +4.5%, Europe +11.8%, Asia +18.7%, US +23.2%).

Leaving Japan, expanding online

Still, not everyone at Tesco is completely happy with the results and the company promised to “invest in price and promotions, ranging, service and store environment” and bring “substantial changes to our core UK business to sharpen competitiveness”. One of those investments (although not in the UK) was announced yesterday: the expansion of a webshop for Tesco’s clothing brand F&F to 21 European countries.

Still, the most important news was that Tesco would be exiting the Japanese market, after “having decided we cannot build a sufficiently scalable business there”. The group now has 5630 stores left, half of which (2865) are in the UK and 21% (1172) are in the rest of Europe: the Czech Republic (215), Hungary (209), Poland (383), Slovakia (103), Turkey (131) and Ireland (131).