Dry as the Sahara

Terry Leahy was on particularly dry form at the Tesco results today, even by his standards, but the poker face couldn’t mask his pride that Tesco is back on top of its game.

The growth in both sales and profits was strong, and it seems to have bounced back from the problems it was facing in the first half of last year when customers were switching away from it, using the power of the Clubcard to keep customers loyal.

Elsewhere it has used the same sort of might to even greater effect. In Ireland it cut the prices of over half its range by over 20% and it’s had the desired effect, going from an 18% like for like decline in the first half to an increase in the second. The US remains a big challenge but Leahy was bullish about the prospects for Fresh & Easy, and its willingness to take decisive action in the overseas markets it operates in which have struggled suggests Tesco will stick with it until it gets it right.

Tesco’s results show what the rest of the supermarket pack is up against, and particularly Asda with its bold bid to become number one in non-food in the UK. When asked about Asda’s ambition, Leahy came out with an almost dismissive laugh before saying “It’s better not to forecast market share , it’s better to look after customers. Customers will decide who is number one”

Last year showed that a wounded Tesco is a dangerous beast. This year expect it to go into overdrive in its growth areas of non-food, and non-retail services such as banking.