Tesco 2005 Annual Report Download - page 7

Tesco PLC 5
Diversity We try to ensure that at all times and in every
aspect of employment, including recruitment, training
and development, everybody receives the same treatment,
regardless of factors such as gender, age, colour, creed, race,
ethnic origin, disability, marital status, religion or belief, trade
union membership or sexual preference and orientation.
Core UK business UK sales grew by 11.9% in the year, on
a 52 week basis, including a like-for-like increase of 9.0%.
Over two million more customers are choosing to shop at
Tesco today compared with a year ago, with most of the
growth coming from our existing stores. Average spend per
visit (excluding Express convenience stores) is also up – by
over 2% – despite deflation in our stores, reflecting the success
of our efforts to improve our inclusive offer on all fronts.
We have continued to invest in the things that matter for
customers. For example:
• On-shelf availability has improved significantly during the
year. Our measure of this, which is based on our in-store
picking of Tesco.com orders, shows that availability improved
by a full percentage point compared with last year.
• Self-service checkouts, which save time for customers, are
now in over 100 stores, with over half a million shoppers
now regularly using them.
• We have again strengthened our position as the UK’s best
value retailer by investing £230m in improving our price
position through a series of price campaigns during the year.
A further £67m of cuts were announced in early April 2005.
• The development of our Value brand continues and the
range now extends to 2,200 products, including many
non-food items. Our Finest range also continues to
develop, with 400 new lines launched in the year, bringing
the total to 2,300.
Tesco re-invests efficiency savings for the benefit of our
customers. Our Step-Change programme has delivered savings
this year of £270m, on top of almost £200m achieved last year.
We have made good progress with the development of our
store formats. During the second half, we opened our 100th
Extra hypermarket in the UK, having opened the first at Pitsea
in only 1997. We anticipate being able to open up to 20 new
Extras a year, mostly through extensions to existing superstores.
The new Extra stores at Dumfries, Stockport and Stafford,
which opened in the year, were part of a programme of
regeneration development partnerships, bringing jobs and
modern retail standards to deprived urban areas. We have
nine more such projects currently under development.
Across the country more customers have access to our Express
convenience stores as we bring the Tesco offer and lower prices
to new neighbourhoods. Over four million of our customers
walk to their local Tesco as a result of the growth of Express.
We converted 202 T&S stores during the year, bringing
the total number of Express stores to 546.
A further 26 T&S stores will be converted this year. Thereafter,
the expansion of Express will be mainly through organic
growth, with the One Stop fascia retained as a successful
convenience format in over 500 smaller stores.
We have also completed the conversion to Express of the
Adminstore stores in London (Cullens, Europa and Harts).
On average, these stores have seen sales more than double
and are nearly 20% above our forecasts.
A total of 1.5m sq ft of new sales area was opened during the year
across all formats, of which 350,000 sq ft was in extensions to
existing stores. This includes the ten former Safeway stores
which we acquired last autumn – sales in these stores have
almost doubled and are also nearly 20% above our forecasts.
Looking forward, we are aiming to maintain our rate of growth
in selling area, from a combination of extensions and new stores.
We are planning a more normal year in terms of like-for-like
sales growth and we are keeping an eye on costs, especially
energy, with oil prices up 70% year on year, and the huge rise
in business rates.
Non-food We have made further progress with our non-food
offer. Sales growth, in the UK alone, was 17% during the year
with total non-food sales increasing to £6.0bn (2004 – £5.1bn).
Volume growth was even higher at 18%.
In all our large non-food categories we have seen strong
growth. For example, our home entertainment sales grew
by 20% and the stationery, news and magazines category
by 26%. We saw particularly good performance from many
of our seasonal non-food ranges up 27%.
Our clothing brands Cherokee and Florence + Fred have
once again achieved significant growth, and remain the
fastest expanding in the UK market in both value and volume.
Clothing sales grew by 28% in the year. The fashion press
has again regularly featured our products.
Retailing services Our efforts to try to bring simplicity
and value to sometimes complicated markets are behind
the success of our retailing services businesses.
In Telecoms, we now have a million customer accounts after
only one full year of operation. We entered the broadband
internet access market in August. We now have a very competitive
offer in mobiles, domestic fixed line and internet access with
considerable scope for future growth. The business, which is
still in its start-up phase, made a small operating loss of £4m.