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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 11​​ October​​​​​​​​​​​​​, 2017

Tesco profits continue to improve

Tesco reported a jump in half-year sales as LFLs in the UK increased 2.2% in the six months to August 26. Group LFLs advanced 0.8% while group sales rose 3.3% in the period. Tesco’s operating profit before exceptional items jumped 21.1% in its UK and Irish core business, and 27.3% to £759m in the group during the period. Tesco’s online grocery sales rose 4.6% in the half year, while its clothing brand, F&F, jumped 3.5% on a LFL basis. Tesco’s chief executive commented: “All of this is possible because of the focus we have placed on serving shoppers a little better every day. Our offer is more competitive and more customers are shopping at Tesco.”
In other retailer news, several furniture retailers have reported positive sales, despite the ongoing challenging market conditions. Sales at ScS rose 4.4% in the year to July 29, despite order intake slipping 0.7% on a LFL basis - pre-tax profit was up 9.9% in the year. became profitable in the UK for the first time, as UK sales jumped 38% in the year to December 31 - group sales across the seven countries where it operates jumped 48%. And DFS revenue edged up 0.9% in the year to July 29 - profits fell 22%, however, due to weakening customer demand and higher costs of imported materials following the fall of the value of Sterling since the Brexit vote. 
Finally, the Food sector continues to show strength, innovation and resilience. LFLs at Greggs rose 3.9% in the 13 weeks to September 30, while total sales across its portfolio increased 7.8%. During the period, Greggs opened 98 new shops, taking its total to 1,830 across the UK - Greggs is also trialling a home delivery service in partnership with UberEats. Sales at Pret A Manger reached £776m in 2016, while pre-tax profits jumped 39% to £75.5m, helped by new flavours and the trend for healthy eating. Pret opened 31 more stores in the UK in the year, including a vegetarian only shop in London. Meanwhile, the growing demand for meat, egg and dairy-free dishes has encouraged operators to adjust their menus in response to the changing demand - Wagamama is launching a vegan menu, while The Diner will introduce a vegetarian menu in its restaurants.

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