| Tesco profits up, but demand at home hit by fuel costs • Chief executive Sir Terry Leahy bows out of City presentations• Tesco says US business out of the red by 2013Tesco boss Sir Terry Leahy today bowed out of formal financial presentations to the City with an encouraging assessment of the economic outlook and a pledge that the grocer's loss-making US business will be in the black by 2013.The chief executive, who is due to step down in March after 14 years at the helm, is standing by his forecast earlier this year that the UK is not heading for a double-dip recession. He admitted that trade had turned down in recent weeks, but blamed much of that on higher petrol prices, which had added £19 a month to an average family's outgoings.The UK economy, he said, would be pulled into a stable recovery by the stronger rebound in Asia and would not be derailed by the government's spending cuts, which will be unveiled on 20 October: "There are some tough decisions to be made, but what is important is the government gets the economy going. The economy is strong enough, they are necessary measures and our business will grow through it."Leahy was speaking as Tesco posted a 12% increase in half-year profits to £1.6bn. Total revenue climbed 7% to almost £30bn – or £165m a day. The chief executive of Britain's biggest retailer, said that while economic recovery was "slow and steady" at home, the group had seen a "sharp" bounce in its international business.Like-for-like sales for the second quarter were up by just 0.4% (excluding VAT and fuel), which Clive Black, a Shore Capital analyst, said was low and implied a decrease in sales volumes, once food price inflation was stripped out.Leahy said inflation was running at 2-3%, with some of the increase driven by changing global demand for basic foods as Asian consumers eat more traditionally western foods. However, some of the price gyrations, he said, were down to financial speculators. "Financial investment in food commodities is now a feature and it will exaggerate movements [in prices] up and down in future". Such investors, said Leahy were "a very important part of a modern economy, but sometimes you can have too much of a good thing".The most recent figures from consumer research firm Kantar Worldpanel showed Tesco's market share slipping to 30.8% from 30.9%, with growth trailing behind its rivals. Morrisons reported growth of 1% for the period and Sainsbury's is expected to report growth of 1.3% tomorrow.Like-for-like growth at Tesco's international business was 2%, with Korea, Thailand, Slovenia and Poland among the best performers.The US Fresh & Easy offshoot, which was launched in California in 2007, lost £95m on sales of £247m. The convenience stores, which have been battered by the US recession and basic retailing mistakes – like packet sizes that were too small – have failed to reach ambitious targets. Today Leahy said 13 of the chain's 159 stores are to be mothballed. They are mostly in Las Vegas and Phoenix, in new developments where the population has shrunk as homebuyers have moved out rather than carry on paying mortgages on homes worth far less than they borrowed.However, Leahy said the chain was now coping well with the economic conditions in California and the opening programme for stores in other areas is being ramped up from one every fortnight to two a week.Phil Clarke, who will take over from Leahy next year and had been expected to reconsider the future of the US business ruled out a review of Fresh & Easy: "There is no need to carry out a strategic review," he said. "It is clear that continuing, and moving to profitability, is the right thing to do." He said it would be a "great source of profit" in the future. Leahy said the business would be in the black by 2013.In the UK Tesco plans to open 1.7m sq ft of new store space in the second half – equivalent to 16% of rival chain Morrisons's stores – creating 9,000 jobs.James Grzinic, a Jefferies International analyst, said it was a "steady" set of results: "UK sales are lighter than we expected but there is surprising progress on margins." Earnings before financial charges were £20m higher than Grzinic expected. The shares closed up 1p at 431p.Finance director Laurie McIlwee said Tesco Bank was now a "significant" part of the group's business, with revenues of £474m in the first half and trading profits up 12.2% to £129m. He said new insurance products and a fixed-rate savings account would be launched in the next few months but confirmed that mortgages would not be launched until next summer as the retailer had yet to receive the green light from the Financial Services Authority.TescoSupermarketsRetail industryGlobal recessionEconomicsGlobal economyZoe WoodJulia Finchguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
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One New Change shopping centre to open in City of London Bankers, City of London residents and tourists are set to benefit from a new retail and entertainment centre in the Square MileBankers looking to spend their bonuses could be tempted by the lure of Topshop instead of a Ferrari showroom from this week as the City's first major retail centre opens in the shadow of St Paul's Catherdral.One New Change was built at a cost of £540m and has attracted the ire of Prince Charles who has criticised its sleek design, which has won the 560,000 sq ft complex the nickname of the "stealth bomber". Financial professionals seeking something more expensive than Topshop will be able to browse Banana Republic and Hugo Boss concessions, while Jamie Oliver and Gordon Ramsay are opening restaurants in the building. In keeping with its surroundings, One New Change will have 330,000 sq ft of office space above its retail outlets.The shopping centre is targeting the 350,000 City workers who normally have to shop in the West End and is also expecting interest from the City's 10,000 residents, as well as tourists, by staying open at weekends. The City of London gave the go-ahead to One New Change as part of a drive to improve the quality of food and entertainment in the area over the past two decades.In a Guardian interview last month, the City of London's planning officer, Peter Rees, said the shopping centre would help confirm that the City has shed its bowler-hatted image. "The City has become a much more rounded place. The quality of food available and the entertainment and leisure facilities have improved, and we're bringing shopping back to the City. It's not just a place to work any longer."Retail industryCommercial propertyReal estateFinancial sectorDan Milmoguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
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