Tesco said that its full-year clothing sales rose 7.3% to hit £1bn, driven by a strong performance from kidswear, its F&F brand in Europe and its online offer.
Tesco, which said today that it had recorded an overall increase of 10.1% in underlying pre-tax profit during the year to February 27 to £3.4bn, said kidswear sales rose 15% during the year. During the year the grocer also launched its standalone online clothing offer.
Clothing like-for-likes grew 14% in the retailer’s four central European markets following strong growth in the previous year. Joint buying, whereby 95% of the supplier base in Central Europe - which includes the Czech Republic, Hungary, Poland and Solvakia - is the same as in Ireland and the UK - has resulted in group scale and expertise, it said, resulting in improved costs and quality.
Tesco said the success of its F&F own-label range, particularly in Central Europe, had led to Tesco becoming one of the largest clothing retailers across the four Central European markets.
The F&F brand has also been launched into four Asian markets, taking the number of countries in which it is sold to ten.
The retailer said that clothing is “now a strength” across its international markets and an example of how it can bring global scale and skill to the overseas division.
Total non-food sales rose 6.2% to £13.1bn, with £9bn generated by the UK business and £4.1bn by the international division.
Tota profits at Tesco came in in line with City estimates and group sales excluding petrol rose 8.5% to £62.5bn. Net debt reduced to £7.9bn, ahead of plan.
In the UK, the retailer’s sales rose 5.5% excluding petrol to £42.2bn. Profit increased 6.7% to £2.41bn. The grocer said its performance was better in the second half. Excluding petrol and adjusting for VAT, like-for-like sales were 3.7% in the first half and 2.7% in the second half, driven by strong volumes.
Tesco said it has continued to invest in availability, service, range and quality.
Chief executive Sir Terry Leahy said: “By remaining focused on our strategy Tesco has weathered the economic storm well. Across the group, we have successfully adapted our cost structures and ranges to help customers save money when they’ve needed to and treat themselves when they’ve wanted to. Our positions in international markets and non-food meant we faced strong headwinds when the downturn came but it will be these parts of our business which will grow fastest as the recovery strengthens.
“Across all parts of our strategy - UK, international, non-food, services – our business is now stronger than it was before the recession. With leaner operations, improved market shares, strategic acquisitions performing well and a strong organic development programme, we’re well placed for sustained profitable growth. And with the balance sheet strengthening, we have strong foundations in place for improving returns on capital going forward.”