Tesco reports over 6% fall in annual profits

Tesco Plc, the UK's biggest retailer, on Wednesday reported a fall of more than 6 per cent in its annual profits even as its total global sales reported a marginal increase.

The British retailer announced that its underlying group profits slipped 6.9 per cent year-on-year to £3.05 billion in the year ended February 22, while total global sales jumped 0.3 per cent to settle at £70.9 billion. Like-for-like sales that strip out the effect of new store openings slipped 1.4 per cent from the previous year. It was the second consecutive year of fall in the retail giant's annual profits.

In Europe, the group's profit slipped 28 per cent to £238 million as sales in a number of countries, including Hungary, Poland, Slovakia and Turkey, Ireland, and the Czech Republic, all fell. In Asia, trading profit was down 5.6 per cent to £692 million. However, Tesco also reported an increase of 9.8 per cent in its bottom-line pre-tax profits to £2.25 billion in the year under review.

The figures are as bad as many market experts had been expecting the retailer to post. A number of analysts had projected a decline of up to 10 per cent in the group's profits to £3 billion.

CEO Philip Clarke, who is reportedly facing calls to quit from a top shareholder, tried to pacify shareholders with claims that the retailer had a "big and bold" revival plan. He insisted that his revival strategy of cutting prices, expanding online sales and revamping stores was right.

In the after-hours trade, Tesco shares gained 7½p to close at 293_p apiece.