E-COMMERCE
Massive jump in profits for Tesco.com
08-04-2003
by John Cradden
Grocery giant Tesco has posted strong financial results for the past year, including increased sales and profits for its Internet shopping division, Tesco.com.
In a preliminary statement of results for the year ended 22 February 2003, the UK company said that Tesco.com made a profit of STG12.2 million, up from STG400,000 in the previous year, and achieved sales of STG447 million, an increase of 26 percent year-on-year.
The company's UK grocery home shopping business covers 96 percent of the population and with over 110,000 weekly orders, claims to be the largest grocery Internet operation in the world. As well as the UK, it offers Internet shopping in Korea, Ireland and through a joint venture operation in the US (California and Oregon).
Tesco.ie, which has been up and running for over two years, now has 10,000 active customers and covers 75 percent of the population, according to Dermot Breen, director of corporate affairs, Tesco Ireland. "It has performed very well and is now operating profitably, one year ahead of schedule," he said. Tesco.ie achieved sales of EUR10 million last year.
Breen added that the company is currently exploring expanding the service to new areas not already served as well as constantly improving the usability of the Web service. He added that the on-line service sources its products from local stores, which is different to the US model of sourcing products bought on-line from a central warehouse. Tesco's US partner, Safeway, now operates on the local store model.
As a whole, Tesco achieved sales for the year of STG28.6 billion, a rise of 11.5 percent. The firm's pre-tax profits rose by 13.3 percent to STG1.36 billion. The grocery firm's recently created Personal Finance division achieved a profit of STG 96 million in the year to date.
In the Republic of Ireland, Tesco reported "a strong year" with a reasonable 8 percent sales growth for the year. Tesco said in January it planned to create 1,500 new jobs in Ireland over the next few months as it opens six new outlets and a distribution centre in Ballymun. The investment is worth over EUR100 million.
It opened its first petrol station at Killarney and will soon begin work on its first 65,000 square foot Irish hypermarket in Clarehall, Dublin. In Ireland, Tesco is now the largest food retailer with 77 stores throughout the State, employing 10,200 people.
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