Tesco Asia sales slip further, but profit up
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Tesco Asia like-for-like sales continue to decline while the UK-headquartered company repositions its offer – masking a stronger underlying performance for the business.
“We have made good progress in our discussions with suppliers towards a new commercial approach,” explained Tesco CEO Dave Lewis in a quarterly update.
“We also accelerated planned changes to our operating model in Thailand, helping to reduce costs and underpinning our profit recovery.”
Lewis said that despite minor changes to the government-issued welfare cards scheme during the third quarter, Tesco Thailand sales fell by about 1 per cent for the 19-weeks including the key Christmas trading period.
Restructured Thailand store operations have led to reduced costs, underpinning profit recovery at the expense of sales.
Referring to Tesco’s global operations, Lewis added: “We have more to do everywhere but remain bang on track to deliver our plans for the year and as we enter our centenary we are in a strong position.”
The December quarter represented the 12th consecutive quarter of like-for-like sales growth for Tesco globally, with sales up 2.6 per cent.
Questions & Answers
Q.What is causing the decline in Tesco's Asia like-for-like sales?
What is causing the decline in Tesco's Asia like-for-like sales?
Tesco is intentionally repositioning its offer in Asia. This repositioning, alongside accelerated changes to its operating model in Thailand to reduce costs, is contributing to the sales decline while masking a stronger underlying profit recovery for the business.
Q.How did Tesco's sales perform in Thailand over the Christmas period?
How did Tesco's sales perform in Thailand over the Christmas period?
Tesco Thailand's sales fell by approximately 1 per cent during the 19-week period that included Christmas. This decline occurred despite minor changes to the government-issued welfare cards scheme during the third quarter, impacting trading figures.
Q.What is the global sales trend for Tesco, despite the Asia performance?
What is the global sales trend for Tesco, despite the Asia performance?
Globally, Tesco has experienced 12 consecutive quarters of like-for-like sales growth, with sales up by 2.6 per cent in the December quarter. This indicates a strong overall performance masking regional specific challenges.
Q.What is the primary reason for the improved profit despite reduced sales in Asia?
What is the primary reason for the improved profit despite reduced sales in Asia?
Restructured operations in Thailand have led to reduced costs. This cost reduction is underpinning the profit recovery, allowing the business to improve its financial standing even as sales figures decline in the region.