Tesco’s record £1.15bn half-year profit announcement
yesterday masks even faster growth by its online grocery
business.
The supermarket giant posted half-year results showing a 12.5%
increase in underlying profits, to £1.15bn. Sales figures across
the group rose 12.7%, with £20.7bn revenues for the half-year.
But the Tesco.com online food store saw sales rise by 28.7%,
with profits – before the start-up costs associated with the new
Tesco Direct non-food service – soaring 43.1% over the same
period.
Total Tesco.com sales of groceries and wine reached £554m, with
profits of £33.8m. The online store now has around 750,000 regular
users and is receiving close to 220,000 orders a week.
Figures released last month by analyst comScore Networks
revealed that Tesco was picking up two-thirds of all online grocery
orders in the UK, well ahead of nearest rival Asda, with 16% of
orders.
The half-year results came just weeks after the delayed launch
of the Tesco Direct non-food web ordering service, which was held
up by IT problems believed to have been linked to the company’s web
infrastructure.
But Tesco said response to the new service had been “very
positive” with more than a million hits on the website in its first
three weeks.
Richard Hyman, managing director of analyst firm Verdict
Consulting, described the Tesco.com results as “very strong”. He
added; “It means their online sales are already more than £1bn on
an annualised basis and profitability is growing very well.”
Although the online sales figure was “piddling” in comparison to
Tesco’s total revenues, Hyman said, “It’s very important and it’s
growing fast. This represents the kind of business opportunity that
given Tesco’s strengths is relatively low-risk and relatively
inexpensive to pursue.”
In some ways it was unfair to judge the value of the online
business against the overall group profit figures, he suggested.
“Most people would give their right arm to get £34m of profit in
six months of internet trading.”
A Tesco spokesman said: “It’s early days for Tesco.com, but we
believe it will become an increasingly important part of the
business. We’re the UK’s number-one online retailer and this is
partly due to the fact that we’ve made the technology match our
needs rather than the other way round.”
Tesco’s announcement of its half-year results also noted that
new checkout technology had boosted supply chain efficiency. The
spokesman said part of the company’s step change improvement plan
had focused on IT.