Clothing sales give Tesco needed boost
Tesco’s clothing line F&F took more than 1 billion pounds last year, providing a much needed boost to the supermarket’s full year results, as overall profits for the group fell for the first time in almost two decades. Similar to Sainsbury’s, which last year recorded that its general merchandise division was growing three times faster than its food business in its interim financial results, Tesco’s F&F clothing arm provided a silver lining to the retailer’s terrible results with a 9 percent increase on like-for-like sales over the year ending February 23.
Tesco’sFY results reports clothing sales growth While general merchandise sales fell 5 percent in the UK on a like-for-like basis, the strong performance of the clothing business provided one of the few highlights in the supermarket group’s FY results, along with online growth, which recorded a growth of 13 percent taking 3 billion pounds in group sales.
Commenting on the strong clothing sales, the retailer said that its clothes were being recognised by its customers due to its introduction of “better garment quality, ranging, and merchandising”.Tesco’s first launched F&F in 2006, following on from Asda’s successful George collection, and since then it has become one of the UK’s largest volume clothing retailers. As well as selling F&F branded clothing in the UK, the retailer also has franchise stores in a number of international markets including Central Europe and Saudi Arabia.
For the year to February 23, the supermarket’s statutory pre-tax profits fell 51 percent to 1.96 billion pounds, which was largely as a result of a 1.2 billion pounds write-down for exiting the US market. While the company saw group sales rise by 1.3 percent overall to 72.4 billion pounds, with group trading profits falling by 13 percent on last year to 3.45 billion pounds, marking the retailer’s first loss in 20 years.
Tesco’s chief executive Philip Clarke said: “The announcements made are natural consequences of the strategic changes we first began over a year ago and which conclude today. With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers.
“Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns.”