Supermarket chain will embark on refurb programme for existing stores
Tesco will slash its store expansion plans by over a third it announced today following a dip in UK profits of 1%.
The supermarket giant will reduce the amount of new space it opens this financial year by 38% as it cuts capital expenditure by £500m to £3.3bn. UK profits in the year to 25 February 2012 fell 1% to £2.5bn.
However, the chain will embark on an accelerated programme of refurbishing its existing stores.
Tesco chief executive Philip Clarke said: “We are focusing our lower overall capital expenditure more into our existing stores and in building our online businesses. We are adapting our right store base for the future, to underpin the returns that create long term value for our shareholders.”
Tesco will refresh or refit 430 stores in 2012/13, which represents over 25% of its current UK store space.
It said any new store openings it did embark on would likely be smaller than its current stores.
The UK arm of Tesco saw revenue grow 5% over the year to 25 February 2012, lagging substantially behind its growth rates in Asia, the US and Europe which were 10%, 32% and 8% respectively.
Tesco’s plans follow an announcement by retailer M&S yesterday that it would cut £100m from its store refurbishment.