Sainsbury's convenience business continued to grow at 20%, with like-for-like growth ahead of it's supermarkets. JS opened their 400th convenience store, at Wolverhampton. This was one of 24 new convenience stores opened in the quarter, bringing the total for the half to 37 and delivering their target of one to two openings per week. JS opened four new supermarkets and completed 12 extensions, adding 390,000 square feet of gross new space in the quarter, including the opening of their most northerly supermarket, in Nairn, Scotland, on the same day as a new supermarket 600 miles away in Dawlish, Devon.
In the UK Tesco reported that LFL sales excluding petrol and VAT, reduced by (0.5)%, with a reduction of (0.9)% in the second quarter. With net new space contributing 3.9%, total sales (excluding petrol and VAT) grew by 3.4% in the first half. Tesco was hit by falling sales at it's big out of town Extra hypermarkets whilst gaining sales at it's Metro and Express stores. Tesco has seized the opportunity to open convenience stores in greater volume than it's peers. Tesco has opened 142 additional stores under 3000 sq ft in H1, has enlarged some 13 medium sized stores and closed or disposed of 11 stores. It is now trading from 2865 stores in the UK of which 2228 are Tesco branded 606 are One Stop and 31 Dobbies.
Tesco gets about two-thirds of revenue from the UK market, where it cut prices on 3,000 everyday items such as bread and milk last month to help reverse four years of market-share erosion. The grocer is also focusing on improving returns on capital in its 13 international markets and said its plan to break even in the U.S. in fiscal 2013 is showing “promising early results.”
The company said it is “broadly comfortable with current market consensus forecasts” for fiscal 2012, adjusted for a provision at its banking business. The company had a £57 million increase in its provision for payment protection insurance at Tesco Bank.
Tesco’s trading profit is from continuing operations and excludes results from its Japan unit, which Tesco has decided to sell.