Wednesday, October 3, 2007

Tesco Profits Grow Amidst Competition Enquiry

Tesco recently announced that its pre tax profits had continued to grow to reach £1.3bn pre tax. Sales also increased to over £25 billion.

  • Tesco's said that its growth had come from various areas including:
  • New markets e.g. China
  • Increased UK market share of supermarkets to 32% (nearest rival is Asda on about 17%)
  • Successful Diversification into non food items such as electronics and clothes
  • Growth of online business.

Sir Terry Leahy, the chief executive of Tesco, announced that he was unconcerned about the OFT inquiry into overcharging of dairy products. He argued most British consumers had a choice of 3 supermarkets. He expected the OFT to clear Tesco of wrong doing.

  • Question - Do You Think that the Supermarket industry is contestable?
See: Contestable Markets

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