SUPERMARKET giant Tesco today said it made £1.4 billion in profits for the first half of its financial year.
The group, which saw pre-tax profits rise 1.5% in the six months to August 29, generated total sales of more than £1 billion a week at £30.4 billion. Like-for-like sales rose 2.7% in the UK - slower than the growth achieved by its rivals.
However, the firm said recent moves to enhance its Clubcard customer reward strategy were paying off, adding it had seen a "significant improvement" in its performance compared with its competitors.
Tesco's underlying profit before tax, which strips out one-off items, was #1.6 billion, a rise of 8.6% and slightly ahead of market expectations.
The UK’s largest supermarket chain has seen its dominant market share position come under attack from rivals in recent months.
In the first half its UK sales including VAT rose 2.8% to £20.7 billion, but this was much slower than the 10% growth seen last year as weaker inflation and the economic downturn hit the figures.
Tesco said the performance was "solid" but said this was "despite competitive market conditions and the backdrop of a weak economy".
Finance director Laurie McIlwee said falling inflation had taken the shine off the like-for-like figures as the company passed a comparative period last year of high commodity prices.
He said Tesco had now started to see its sales figures run at around the same rate as the rest of the industry.
"It has actually converged and performance is much stronger relative to the rest of the market," he said.
He said Tesco usually did better in a period of deflation due to the company’s "everyday" value offering.
The supermarket’s long term plan is to grow like-for-like sales at around 3%, he added.
Mr McIlwee predicted the second half would be a continuation of trends seen in the first.
"I think what you will see in the second half as inflation drops is that retailers will stop promoting as much," he said.
But he expected the fight for supremacy between retailers in the UK to continue.
"It will always be a battle," he said.