Tesco 2011 Annual Report Download - page 28

ANSHAN
In October, we opened our fourth
Lifespace mall – our largest so
far – in Anshan, China. Over
600,000 customers flow through
our four Lifespace malls each
week. We plan to have up to ten
malls open by the end of the year.
In China, we are pushing ahead with our expansion plans, opening
a further 19 stores in the year, including five Express stores. Our
investments in equipping the business for faster growth, combined with
our store roll-out being slower than planned, meant that we made a
small overall loss in the year.
After a sharp contraction in 2009 the economy in Malaysia has also
recovered well over the past year. Our business has delivered very good
sales and profit growth driven by continued investment for customers
in prices, promotions and Clubcard.
In Japan, falling supermarket industry sales are providing a challenging
background for our operations and the business continued to make
modest losses. We were one of the first businesses to respond to the
devastating earthquake and tsunami in Japan in March 2011 with a
corporate donation of £50,000 through our partnership with
the Red Cross.
Our early plans in India are continuing to progress well. Our local
management team is helping our franchise partner, Trent, to develop
its Star Bazaar hypermarket operation.
Our Asian markets offer an exciting long-term growth opportunity and
will be a key focus for our future international expansion, both in our
established markets and in China. We have continued to invest through
the downturn to ensure that we are in an even stronger position as the
economic recovery continues.
This year we plan to open 5.1m sq ft of new selling area. We have also
continued to make good progress in developing strong brands in our
leading Asian businesses with further expansion of Clubcard and our
retail services businesses.
Asia results 2010/11
£m
Actual rates
% growth
Constant rates
% growth
Asia sales 11,023 21.5 9.7
Asia revenue*10,278 21.4 9.6
Asia trading profit 570 29.5 17.5
Trading margin
(trading profit/revenue) 5.55% 35bp 34bp
HOMEPLUS – A WORLD-CLASS BUSINESS
Homeplus in South Korea is
our largest business outside the
UK, with revenue of £5 billion,
making the business larger than
many FTSE 100 companies.
We entered South Korea through
a partnership with Samsung
and opened our first two
hypermarkets in 1999. Today
we are a sophisticated multi-
format – and moving to multi-
channel – retailer with 354 stores
and we employ over 23,000
people. In just a decade we have
grown from two shops to become
the second largest retailer in the
country and we’re closing in on
the number one position.
And there is plenty more to come
with significant potential for
growth. The organised modern
retail trade in South Korea still
represents a relatively small
proportion of the total market
– just 54% of total retail sales.
We are already the market leader
in the rapidly growing grocery
home shopping sector and have
recently launched our general
merchandise website. We’re
also using our admired brand,
strong store network and large
customer base to develop our
retail services offer.
Together with delivering
outstanding financial
performance, we are aiming
to be the most respected
corporate brand in South Korea
and we’ve already been awarded
South Korea’s Most Admired
Company award.
We have continued to invest
through the downturn to ensure that
we are in an even stronger position as
the economic recovery continues.
21.5%
Asia sales growth
* Revenue excludes VAT and the impact of IFRIC 13.
24 — TESCO PLC Annual Report and Financial Statements 2011
BUSINESS REVIEW
To be an outstanding international retailer