United Kingdom-based Tesco plc today reported strong overall group revenue and profit for its 2009/10 fiscal year, which ended on February 27, 2010.
However, the global food and general merchandise retailer reported a loss of $253 million, on sales of $544 million, for its Fresh & Easy Neighborhood Market USA fresh foods and grocery chain for the fiscal year.
That's a loss of $45 million more than the $208 million loss Tesco reported for Fresh & Easy in its 2008/09 fiscal year. Fiscal year 2008/09 revenue for Fresh & Easy was $305 million. [Related post - April 19, 2010: Tesco Reports Fiscal 2009 Results on Tuesday, April 20; Estimated $250-$259 Million Loss For Fresh & Easy]
This higher loss is troubling for Tesco because central to its strategy for Fresh & Easy is the concept that by adding numerous additional stores fairly rapidly, which it did over the last year, and thus increasing its sales volume, it would narrow the amount of money it's losing with Fresh & Easy.
Revenue did increase considerably (as you can see above) from fiscal 2008/09 -to- 2009/10 - primarily because of the numerous (about 30) new Fresh & Easy stores opened during the period, rather than via same-store-sales growth. But rather than decreasing, the fiscal 2009/10 dollar loss amount increased in 2009/10, over 2008/09, as detailed above.
Tesco CEO Terry Leahy said today the retailer expects its fiscal year 2010/11 loss for Fresh & Easy to be about the same as the $253 million for fiscal year 2009. Leahy added he believes the losses for Fresh & Easy have peaked, meaning he doesn't expect the fiscal year 2010 loss to be higher than the $253 million. Tesco's fiscal 2010/11 year began on February 28, 2010.
The CEO also announced today that Tesco plans to open 50 new Fresh & Easy stores in fiscal year 2010/11, which started on February 28 and ends in early 2011.
Tesco: Strong group revenue and profit
Tesco plc's profit for the fiscal year rose to 2.33 billion pounds ($3.58 billion) from 2.13 billion pounds ($3.22 billion) a year earlier.
Fiscal year 2009/10 revenue increased 5.6% to 56.91 billion pounds ($87.5 billion) from 53.9 billion pounds ($82.82 billion) in the prior financial year, which included one extra week.
[Click here for a complete summary of Tesco's fiscal year 2009/10 financials. Click here for an interview with Tesco CEO Terry Leahy, along with a webcast of the financial results.]
Fresh & Easy Buzz will be publishing a detailed analysis piece, focusing on the Fresh & Easy loss and Tesco CEO Terry Leahy's 50% sales increase projection for fiscal year 2010/11, at the end of the week. Stay tuned.