Tesco's profits plunge by 23.5%

Tesco, UK’s biggest supermarket chain, has reported a sharp drop in profits during the first half of its financial year.

11:34 02 October 2013

The UK’s biggest supermarket chain, Tesco, has reported a significant drop in profits during the first half of its financial year. The figures were 23.5% down.

Tesco said that profits in Europe fell by 67% while Asian profits (not including China) dropped by 7.4%. Meanwhile, UK trading profits increased by 1.5%. The firm blamed the huge drop on a challenging retail environment particularly in Europe.

Shares of the company dipped by 4.4% an hour after the UK markets opened.

Trying to explain the figures, the firm's chief executive, Philip Clarke, said: "There is less pessimism around, but customers are still not seeing real disposable incomes improve."

Clarke speculated on the BBC's Today Programme: "They are, perhaps, feeling a little better about the future.”

Meanwhile, rival Sainsbury’s, which announced a 2% increase in like-for-like sales during the second quarter of its financial year, is the only major supermarket that has increased its market share.

According to Sainsbury’s chief executive Justin King, "Our groceries online business grew by over 15% in the quarter and is now worth over £1bn in annual sales.

"Our convenience business grew 20% year-on-year as customers topped up more frequently during the warm summer weather."