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Profits up at Tesco but clothing growth slows

Tesco saw group sales and profits rise in the first half of the year, but non-food growth slowed during the period.

Tesco's group sales rose 14.1% to £28.1 billion for the 26 weeks to August 23, while underlying profit before tax rose 10.3% to £1.5bn.

Tesco's non-food growth, however, has slowed, with growth in the UK of 4% during the first half, compared with 8% growth in the second half of last year.

In a statement, Tesco said: "In a difficult clothing sector, our Cherokee and Florence & Fred brands did well and we outperformed significantly a falling market. International clothing sales rose 18%, reflecting the success of our brands in Central Europe." Tesco did not break down clothing performance in the UK.

Total UK non-food sales increased to £4.1bn, including £1.7bn in the international business, where growth was stronger. Group non-food sales grew 7.3% to £5.8bn.

Tesco's UK sales increased by 9.7% to £20.1bn, with like-for-like growth in stores at 6.7% and 3.0% from net new stores. Excluding petrol, like-for-like sales grew by 3.7%, with growth of 3.5% in the first quarter and 4.0% in the second quarter. UK trading profit rose 8.6% to £1bn.

Tesco chief executive Sir Terry Leahy said: "Tesco is at its best in tough markets - responding to the changing needs of customers - and that's why we have been able to make good progress this year, despite facing into powerful economic headwinds and carrying planned start-up losses in the US. Our business is strong, broadly-based,increasingly international and, I believe, well-placed not just to cope with the challenges which lie ahead but also to grasp the growth opportunities open to us by continuing to invest in our strategy."

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