Tesco, the UK's
biggest grocer, is pushing for £1bn of profit from its high-tech
businesses within the next few years, CEO Terry Leahy announced
this morning.
The businesses, principally Tesco Personal Finance, tesco.com,
Tesco mobile phone operation Tesco Telecoms and loyalty scheme
manager Dunnhumby, make up
Tesco's Retailing Services division. It contributed just over 6% of
Tesco's £28.1bn sales, and just under £200m in profits for the
first half.
Leahy said, "These businesses have now become substantial
contributors to group sales and profits and they offer the
potential to become even more material in the future as they
accelerate their rate of growth.
"We set a target to grow the aggregate profit contribution from
Retailing Services to £1bn over the next few years," he said,
announcing Tesco's
financial
results for the first half of 2008.
Online grocery orders rose by more than 10% to more than 7.5
million. Tesco Direct sales were helped by rises in average order
value and customer numbers. Tesco's online business in Korea grew
more than 90% and in Ireland by more than 65%.
Leahy said Tesco will open its second dot.com-only store to
fulfil on-line grocery orders for customers in most of Kent, in
Aylesford next month. The first, in Croydon, grew like-for-like
sales by 29% in the first half, and its sales are now running at
well over £1m per week, he said.
Tesco's catalogue service, which offers 12,000 goods online and
7,000 in the catalogue itself, saw higher order volumes. Tesco now
has 233 instore desks where customers who order online or by phone
can pick up their shopping.
Tesco Telecoms grew steadily in the first half. "Tesco Mobile
has remained the number one pre-pay provider for overall customer
satisfaction and was the only major operator to grow its customer
base in the first half," Leahy said. "Our branded telecoms hardware
business (landlines, branded mobiles, accessories etc) has
continued to grow very strongly in the first half."
Tesco is benefiting from its technology investments in other
ways, Leahy said. Faster, more accurate scanners and checkout
cameras that let store managers track queue lengths continually
meant 26 million extra customers had one-person queues at the
till.
Self-service tills now took 20% of all transaction, Leahy said.
On-shelf availability, a key indicator of how well Tesco manages
its supply chain, improved again, he said.
Leahy said Andrew Higginson, group finance and strategy
director, will become chief executive of Retailing Services to
drive growth.
In the first half, Retailing Services sales were £1.7bn, up
16.4% on last year, and profits were £200m, up 26.5%. Tesco.com
sales were up more than 20% to £902m with profit rising by 21% to
£48m.