Britain’s biggest retailer Tesco failed to report meaty profits in the first quarter of the year, thanks to the horsemeat scandal.
The supermarket giant posted a 1% fall in UK like-for-like sales and a slide of 5.5% in Europe. It also reported a slump in demand for frozen and chilled convenience food.
Chief executive Philip Clarke defended the slide in profits saying that slump was part of Tesco’s strategy to break away from the consumer electronics category.
“Our plan is on track. We decided we’re going to reduce our reliance on categories that quite frankly take up a lot of space and don’t take a lot of money,” he said.
“I couldn’t sit here and say I’m happy with performance. As it happens, our plan was that we would take sales backwards this year while we make these changes.”
Tesco insisted that it’s “well behind” the impact of the horsemeat scandal and has completed nearly 1,500 tests on its meat ranges to relaunch the four products affected. The firm’s profits fell for the first time in two decades in the year.
Dan Coen, director at advisory and restructuring firm Zolfo Cooper, thinks Tesco will bounce back.
“Despite recent hiccups, Tesco is still leading the charge for British retail. The recent acquisition of restaurant chain Giraffe, along with its stake in coffee shop Harris + Hoole, are examples of the innovative ways the retailer is looking to diversify its offering for customers. By installing these outlets in its larger stores, Tesco will make more effective use of its vast floor space and become a more attractive destination for consumers.”
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