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New York City -- Tesco PLC said Tuesday that its profit rose 14% to $4.3 billion in its most recent fiscal year ending Feb.26, while annual group sales increased 8% to almost $106 billion. However, losses continued to mount at its U.S. division, Fresh & Easy Neighborhood Market, which lost about $302.6 million. The division, which opened its first stores in 2007, now has 172 locations. It has yet to post a profit.
Tesco remains committed to Fresh & Easy, and said it is ramping up expansion, with about 50 stores on tap for this year.
Tesco attributed the worsening performance of Fresh & Easy to the integration of two suppliers and exchange-rate movements. However, the chain said it expects losses to “reduce sharply” in the current year as “strong growth in like-for-like sales continues. Tesco predicted losses would fall sharply in the current year and that the stores would break even by 2012-13.
"I've spent a lot of time with the Fresh & Easy team, and I remain confident that break-even toward the end of fiscal 2012/2013 remains a realistic objective," said Phillip Clarke, CEO, Tesco, in a conference call with analysts Tuesday.