Business Opportunities in India
Tesco: big plans for China – India plans on track
Our Bureau
Date of posting: 27-04-10
      Supermarket chain Tesco feels clear signs that the international markets are starting to recover and has announced a jump in profits in a release in which it has reported its preliminary results for the year 2009-10.

      For the financial year which ended on February 27, Teso reports group revenues of £56.9 billion pounds excluding VAT (approx. 64.9 billion Euros), which was 5.6& higher than in the 53 weeks before. A profit before tax of 3.4 billion pounds is reported, an increase of 8.7% against the 53 weeks before.

      In the reported year, 5.1 million square feet of new space have been opened. For 2010/11, Tesco plans to open 8.5 million square feet in addition to nine shopping malls in China. China is the market where Tesco plans a long term growth. Foundations for long-term growth are layed, says Tesco, with further investments in new stores, supply chain infrastructure and management. The focus is on three regions – each with its own management team – and with a focus on expansion into second and third tier cities. 17 hypermarkets have been opened in the year.

      “We have delivered a strong performance in Asia despite challenging economic conditions in the region”, the release says. Profits in Asia grew by 24% with margins strengthening significantly in the second half (6.1% compared to 4.3% in the first half). Overall revenue growth in Asia was 19.7% in the year. For Tesco, the Asian markets offer a significant long-term opportunity. Besides China, Tesco is present in Korea, Malysia, Thailand and Japan.

      The plans in India would be progressing well, the local management team is helping the franchise partner, Trent, to develop its Star Bazaar hypermarket operation which is currently achieving like-for-like sales of c.40% and buys more than 70% of its products from Tesco’s wholesale business. “Plans for our wholesale business are also on track with our first cash and carry store expected to open towards the end of this year”, Tesco informs.

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