Tesco misses UK targets

Tesco has this morning unveiled record underlying profits of £3.8bn – but it also revealed a fourth-quarter sales slump as it admitted it missed UK growth targets.

The group said UK like-for-like sales, excluding VAT and fuel, fell 0.7% in the three months to February 26 – leaving overall sales flat over the financial year as it struggled to combat tough consumer spending conditions.

But a better performance overseas helped the group notch up another year of record annual underlying profits, up 12.3% to £3.8bn.

The group said: “We didn’t achieve our planned growth in the year and this was only partly attributable to the deterioration in the consumer environment during the second half.

“We can do better and we are taking action in key areas – for example, to drive a faster rate of product innovation and to improve the sharpness of our communication to customers.”

The latest sales results mark a tough debut for new chief executive Philip Clarke, who took on the top job from Sir Terry Leahy last month.

He outlined a six-point plan for the year ahead, including a priority in the UK to improve its non-food sales performance.

However, Tesco gave little hope that retail conditions in the UK would improve this year. It said trading would remain challenging, particularly on non-essential items, as consumers tighten their belts.

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