Tesco annual profit up 1.7%, but U.S. venture down

London Tesco Plc on Tuesday reported that its net profit rose 1.7% to 2.17 billion pounds ($3.15 billion) for the year ending Feb. 28, from 2.12 billion pounds ($3.08 billion) in the previous year.

Revenue for the year was up 15% to 54.3 billion pounds ($79.1 billion). The supermarket chain also stated that it has made a good start to the new financial year with total sales up by 9.2% in the first six weeks.

"Whilst the company is not immune from the wider economic environment, these results have shown a resilience which should remind investors of Tesco's innate strength," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.

Tesco, the world's third-largest retailer, said it plans to add 11,000 employees this year in Britain, where it now has 280,000 staff in 2,184 stores. In the 14 countries where it operates, including Britain and the United States, Tesco employs 440,000.

Tesco accounts for 30% of Britain's grocery market, but recently its growth rate has been exceeded by such competitors as Sainsbury's and Morrisons.

The company reported difficulties at its Fresh & Easy stores venture in the United States, losing 142 million pounds ($207 million) during the year, up from the 100 million pound ($145.7 million) loss it had forecast previously and more than double its 62 million pound ($90 million) loss in the previous year.

It said it expected losses in the current year to be broadly the same as last year.

Tesco blamed the higher losses largely on the stronger dollar, but admitted it was forced to adjust its product range at its 115 stores and engage in vigorous promotions.

"Given the scale of the economic downturn, particularly in Las Vegas, Phoenix and the Inland Empire region of California, we are also seeing increased demand from customers looking to make stretched household budgets go further -- through more affordable products, larger pack sizes and additional range in some categories, such as grocery and frozen food," Tesco said.

Despite difficulties, Tesco said it planned to open about 60 more U.S. stores this year, matching last year's expansion.