Supermarket group Tesco has raced ahead in the Irish market, with the relentless opening of new stores helping to push annual sales up by 16 per cent to nearly €2.5 billion in the year to February.
A big increase in store space this year is likely to deliver further significant growth in the booming Irish market.
The chain does not discuss its profit margins in the Republic but analysts in London believe they could be in 6-6.5 per cent range, implying Irish profits of €149-€161 million.
However, the chain's parent indicated yesterday that there was a reduction in operating profit growth in the most recent year as result of a one-off property gain in the previous period.
Figures from the London-listed group suggest that the opening of five new stores in Ireland and a refurbishment made an immediate impact on the top line of a chain that recorded "particularly strong growth" in non-food categories such as clothing, hardware, home entertainment and newspapers and magazines.
Sales including value-added taxes (VAT) rose 16 per cent to €2.49 billion, significantly ahead of the 5 per cent rise in like-for-like sales. Total sales net of VAT were up 16 per cent at €2.27 billion, said director of corporate affairs Dermot Breen.
Online sales at 17 stores rose 24 per cent to €18.8 million, and the addition of three filling stations brought its total to eight, with an estimated market share of 5 per cent.
The top-line figures for the Irish business were published as the chain's parent said its pretax, pre-exceptional profit for the year to February was £2.21 billion (€3.18 billion), compared with £1.89 billion in the previous year. Group revenue rose 13 per cent to £38.3 billion, meaning that the growth of the Irish unit was ahead of other divisions.
Head of research at London brokers Panmore Gordon, Philip Dorgan, estimated Tesco to have an underlying profit margin of 6.3 per cent in Britain. "It's probably lower [ in Ireland] given that there's probably more competitive pricing in that market."
This is roughly in line with other retail analysts in London who believe that Tesco delivers profit margins of some 6.5 per cent here. It is not possible to gauge the accuracy of such figures because Tesco, in common with each of its big rivals here, never reveals its Irish profits.
"In the Republic of Ireland we have achieved strong growth in sales and, on a pre-IFRS basis, profit as well," said the group's annual results statement. "Under IFRS, operating profit growth was reduced due to the inclusion of a significant property profit in the prior year results."
This was a reference to the one-off gain in 2004 arising from the sale for €70-€80 million of the parts of the Wilton Centre in Cork not occupied by Tesco.
Mr Breen indicated store openings in 2006 would increase space by 19,510sq m (210,000sq ft). Eight openings are likely, beginning in Tipperary town, followed by Clonmel, Nenagh and Edenderry.
