Tesco 2006 Annual Report Download - page 11

9Tesco plc
• In Japan,it was a challenging year. Sales grew but profits
reduced, mainly as a result of the cost of integrating the
remaining Fre’c stores in the first half and the eight Tanekin
units acquired in Tokyo in October. The first trial Express
format store opened three weeks ago.
• In Korea,Homeplus has continued to make very pleasing
progress, delivering increased sales, including strong like-
for-like, and excellent profit growth. During the year, we
increased our selling space by 29% by opening eight new
hypermarkets, including our first three compact hypers, and
completing the conversion of the 12 stores we acquired in
March 2005 from Aram-Mart. We are also now rolling out
the Express convenience format and we have 11 such
stores trading. Our organic store development programme
is accelerating as planned, with a further 47 stores planned
this year.
• In Malaysia,we moved close to break-even and we are
making positivecash returns, helped by very strong sales
growth, both from new space and from our existing stores.
We have a good pipeline of new space to enable us to
build a strong position. We opened seven new stores in the
year,including our first Express store at Selayang, Selangor.
• Given the uncertainties arising from the announcement of
the asset swap deal with Carrefour last September, it has
been a challenging few months for the business in Taiwan.
Sales grew strongly and although losses increased, the
team has held the performanceof the business together
remarkably well in difficult circumstances.
•In Thailand,wehavehad another excellent year, with
growth in sales, profit and returns. The successful
development of new formats continues and we now have
219 stores trading across four formats, including 139
Express stores, 14 Value stores and ten new supermarkets.
All the newer formats are continuing to perform well,
giving us many moreopportunities todevelop our national
store network.
In Central Europe, our strategic investments in lower prices,
higher product quality and faster development of new space
havecontributed to strong sales and profit growth across
the region. Successful regional initiatives to strengthen our
business – from joint purchasing of own-brand products to
the introduction of a Cherokee clothing range – have also
contributed. Customer numbers are up significantly and this is
driving large market share gains.
• In the Czech Republic,the business has delivered strong
sales and profit growth despite very competitive market
conditions. We have also accelerated our new store
development, adding 20% to our sales area during the
year, with ten openings, including eight compact
hypermarkets, and one of our new ‘1K’ supermarket format
(1,000 sq m) stores.
• The more challenging economic and retail environment
has held back our growth in Hungary but we have still
made solid progress. We have strengthened our market-
leading position by lowering prices, expanding our store
network and developing our infrastructure. We opened
18 new stores in the year, adding 22% to our total space,
including our first 30,000 sq ft compact hypermarket.
A further 30 stores, representing a further 880,000 sq ft
of new space, are planned for this year.
• In Poland,the economic background is looking better
and signs of renewed consumer confidence, combined
with an improving offer in our stores, have been reflected
in strengthening like-for-like sales. We have made good
progress with the development of our 1K, 2K and 3K store
formats, with the early units trading well, giving us access
to a broader range of store development opportunities.
• In the Republic of Ireland,wehaveachieved strong
growth in sales and, on a pre-IFRS basis, profit as well.
Under IFRSs, operating profit growth was impacted due to
the inclusion of a significant property profit in the prior year
results. Sales growth has benefited from strong like-for-like
performance and an acceleration in the growth of our
space. Weopened six new stores with 111,000 sq ft of new
sales area during the year, with a further eight new stores
planned this year.
• Our business in Slovakia has delivered another very strong
performance, with sales and profits significantly up on last
year.Our new store programme is now supported by the
growth of our compact hypermarket format. We now have
18 such stores, with five more planned this year. Our new
central distribution depot at Beckov, measuring 500,000 sq
ft, is fully operational and delivering significant benefits in
lower costs and better product quality.
3
We have introduced
‘Would I buy it?’
training to staff in
Poland to ensure all
of our products are of
the best quality.
4
Our dot.com service
now has over 750,000
regular customers.