Oct.03 - Britain's biggest retailer, Tesco, showed its fightback plan following a shock profit warning was starting to make a difference as it stemmed sales falls, but its performance was outshone by rival J Sainsbury. Hayley Platt reports
At least one in every 10 pounds spent in British shops goes to Tesco. But the world's third largest retailer stunned investors earlier this year with a profit warning - it's first in 20 years. It promised to fightback by investing 1 billion pounds in store improvements. And its latest results suggest it's working - slowly. There's been a small rise in underlying sales after 18 months of decline. Bryan Roberts is director of research at Kantar Retail. SOUNDBITE: Bryan Roberts, Director of research, Kantar Retail, saying (English): "The UK market has finally turned the corner and we're seeing some like-for-like sales growth in Q2 but still an overall like-for-like decline for the first half. So there is some proof finally that the very substantial investments that Tesco are putting into UK stores are finally paying off and we're seeing some growth now." But Tescos won't be opening the champagne yet - all that spending hit pre-tax profits. They fell 10.5 percent to 1.6 billion pounds - it's first loss in 18 years. And its arch rival in the UK is still doing better. Justin King is Sainsbury's CEO. SOUNDBITE: Justin King, CEO, J Sainsbury, saying (English): "The way you grow is by helping customers do the things they're trying to do, save money, cut down on waste, shop a little more frequently. Our convenience stores have been a key part of our success. All of these things, working with the grain of what customers are trying to do is what's helping our business grow against a tough back drop." Both retailers say trading conditions have been a challenge. And Tesco has struggled abroad, particularly in South Korea, it's biggest Asian market. Its U.S. chain Fresh & Easy is also yet to make a profit. SOUNDBITE: Bryan Roberts, Director of research, Kantar Retail, saying (English): "Looking ahead you need to be in a market like China you need to be in India and the likes of Walmart and Carrefour who are doing very well in Latin America so yes emerging markets are extremely important." 40 percent of Tesco's trading profit comes from abroad. But getting the UK right is a key priority. Hayley Platt, Reuters.