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Last Updated: Tuesday, 3 October 2006, 08:37 GMT 09:37 UK
Tesco makes 1.1bn in six months
Tesco shopping bag
A hot summer helped UK sales
Supermarket giant Tesco has seen its half-year profits rise 10.3% to 1.09bn, helped by international sales.

The group saw its overall sales rise 12.7% in the six months to 26 August, with profits at its overseas businesses rising 21.1%.

Meanwhile its online venture Tesco.com showed further growth, with its profits up 43.1% in the period as customers tapped into home shopping.

Tesco is moving into the US as its foreign expansion continues.

'Broad growth'

Tesco sales are growing three times faster outside the UK than within the UK.

By the end of August, Tesco had 949 outlets outside the UK, including 370 hypermarkets. The Czech Republic and Asian nations including China Japan, South Korea, Malaysia and Thailand saw the largest expansion.

Tesco's booming profits are rooted in rock-bottom prices to farmers and a wholesale takeover of the High Street
Vicki Hird
Friends of the Earth

Good summer weather helped the firm in the UK, with second-quarter sales growing 6.6% compared with 4.5% in the first quarter.

Though known as a grocer, the firm said that one fifth of its UK sales were now non-food.

Clothing sales grew 19% while digital cameras and flat-screen televisions helped push electronics sales up 36%.

Six years ago Tesco made its first 1bn annual profit.

Tesco's profits are set to attract criticism from those who accuse the chain of being too dominant and of driving out independent traders.

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Chief executive Sir Terry Leahy acknowledged that the firm had come under fire from critics but said that the vast majority of customers were "pleased" with what Tesco had to offer.

"The growth is coming across the board because customers are choosing Tesco," he told the BBC.

'Wholesale takeover'

This week the firm announced it was moving into the software market, launching a range of budget own-brand PC software.

It has also joined the "green" revolution among supermarkets, offering shoppers incentives to re-use carrier bags.

However Friends of the Earth said action needed to be taken to stop the firm's dominance.

"Tesco's booming profits are rooted in rock-bottom prices to farmers and a wholesale takeover of the High Street," the organisation's supermarket campaigner, Vicki Hird, said.

"Ministers and competition authorities must put the brakes on the Tesco juggernaut and take action to protect our small shops, farmers and the environment."

Sir Terry said that while some types of shops declined with the arrival of a Tesco in the vicinity, others did well and that overall, small retailers on the High Street benefited.

Its performance in non-food meant it was not just rival supermarkets who would be anxious, said Keith Bowman of Hargreaves Lansdowne stockbrokers.

"The majority of general retailers will again be casting a worrying eye," he said.

"Overall, Tesco remains the stock market darling of not only the food retailers, but of the entire UK retail sector. It is the only player with a serious and credible international expansion policy."

Tesco stores




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SEE ALSO
Tesco moves into software market
01 Oct 06 |  Business
Tesco has bumper 2.25bn profit
25 Apr 06 |  Business
Tesco boss sees pay rise by 25%
28 May 06 |  Business
Bats could halt supermarket giant
19 May 06 |  South of Scotland
Foreign growth key to Tesco goals
25 Apr 06 |  Business

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