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Tesco

Coordinates: 51°42′18.89″N 0°1′36.37″W / 51.7052472°N 0.0267694°W / 51.7052472; -0.0267694
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51°42′18.89″N 0°1′36.37″W / 51.7052472°N 0.0267694°W / 51.7052472; -0.0267694

For other uses, see Tesco (disambiguation).
Tesco
Company typePublic (LSE: TSCO)
IndustryRetail
Founded1919 in East London by Jack Cohen
HeadquartersCheshunt, Hertfordshire, England
Key people
David Reid (Chairman),
Sir Terry Leahy (Chief Executive)
ProductsGroceries, Consumer goods, financial services, telecoms
RevenueIncrease£47.3 billion (2008)
Increase£2.97 billion (2008)
Increase£2.13 billion (2008)
Number of employees
273,028
SubsidiariesTesco Stores Limited
Tesco Ireland Limited
Tesco Personal Finance (50%)
Websitewww.tesco.com

Tesco plc is a British-based international grocery and general merchandising retail chain. It is the largest British retailer by both global sales and domestic market share with profits exceeding £2 billion. In 2008, Tesco became the world's fourth largest retailer, the first movement among the top five since 2003.[2] Originally specialising in food and drink, it has diversified into areas such as clothing, consumer electronics, consumer financial services, retailing and renting DVDs,[3] CDs, music downloads, Internet service, consumer telecoms, consumer health insurance, consumer dental plans and software.

abbie

civilisation is in tesco

Corporate tax structure

In May 2007 it was revealed that Tesco had moved the head office of its online operations to the tax haven of Switzerland. This allows it to sell CDs, DVDs and electronic games through its web site without charging VAT.[4] The operation had previously been run out of the tax haven of Jersey, but had been closed by authorities who feared damage to the islands' reputation.[4]

In February 2008 a six month investigation by The Guardian revealed that Tesco had developed a complex taxation structure involving offshore bank accounts in the tax haven of the Cayman Islands.[5] Tesco is in the process of selling its UK stores, worth an estimated £6 billion, to Cayman Island based companies set up by Tesco. These companies then lease the stores back to Tesco. At the time The Guardian claimed that this arrangement would enable Tesco to avoid an estimated £1 billion tax on profits from the property sales, and also to avoid paying any tax on continuing operation of the stores, as the rate of corporation tax in the Cayman Islands is zero. Tesco defended this arrangement, saying it has a duty to organise its affairs in a tax-efficient manner, and pointing out that the corporation already pays a lot of tax, including VAT on behalf of its customers, and PAYE and National insurance contributions on behalf of its employees.

Following these revelations, several MPs called for an inquiry into Tesco's tax avoidance schemes.[6]

Tesco issued a libel writ against the Guardian five weeks later. Tesco denied that it had avoided paying £1 billion corporation tax, but refused to answer further questions, or to clarify the purpose of the complex artificial tax structure they had created. Further investigations by the Guardian discovered that the tax structures were aimed at avoiding Stamp Duty Land Tax, and not corporation tax as originally thought. SDLT is leveled at 4%, and corporate tax at around 30%, so the figure of £1 billion tax avoided by Tesco has been revised to an estimated £90-£100 million.[7] According to the Guardian "Tesco has been involved in a game of cat and mouse with HM Revenue & Customs since 2003. On three occasions when the government has closed a loophole to prevent avoidance, Tesco has taken advantage of ingenious schemes to get around it. Tesco still has 36 stores wrapped up in UK limited partnerships - with Cayman Islands registered partners - which were established in 2006 before the latest loophole was closed."[7]

In June 2008 the government announced that it was closing another tax loophole being used by Tesco.[8] The scheme, identified by British magazine Private Eye, utilises offshore holding companies in Luxembourg and partnership agremeents to avoid a corporation tax liability of up to £50 million a year.[8] Another scheme previously identified by Private Eye involved depositing £1 billion in a Swiss partnership, and then loaning out that money to overseas Tesco stores, so that profit can be transferred indirectly through interest payments. This scheme is still in operation and is estimated to be costing the UK exchequer up to £20 million a year in corporation tax.[8] Tax expert Richard Murphy has provided an analysis of this avoidance structure.[9]

yerrr mayte

urg shut it rory toftt :@

Internet operations

Main article: Tesco.com

Tesco operates the world's largest grocery homeshopping service[citation needed], as well as providing consumer goods, telecommunications and financial services online.

Tesco has operated on the internet since 1994 and was the first retailer in the world to offer a robust home shopping service in 1996. Tesco.com was formally launched in 2000. It also has online operations in the Republic of Ireland and South Korea. Grocery sales are available within delivery range of selected stores, goods being hand-picked within each store, in contrast to the warehouse model followed by Ocado. This model, which is now used by Sainsbury's, allows rapid expansion with limited investment, but has been criticised for a high level of substitutions[citation needed]. Nevertheless, it has been popular and is the largest online grocery service in the world[citation needed]. In 2003, tesco.com's CEO at the time, John Browett, received the Wharton Infosys Business Transformation Award for the innovative processes he used to support this online grocery service.

On 1 October 2006, Tesco announced that it will be selling six own-brand budget software packages for under £20 each, including office and security suites, in a partnership with software firm Formjet.[10] As Formjet is exclusive distributor for Panda Software and Ability Plus Software, packages from these companies are likely to feature.

Tesco offers an internet-based DVD rental service, which is operated by LOVEFiLM and a music download service.

International operations

Countries in which Tesco operates.

Tesco's international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners, such as Samsung Group in South Korea (Samsung-Tesco Home plus), and Charoen Pokphand in Thailand (Tesco Lotus), appointing a very high proportion of local personnel to management positions. It also makes small acquisitions as part of its strategy for example, in its 2005/2006 financial year it made acquisitions in South Korea, one in Poland and one in Japan.[11]

In late 2004 the amount of floorspace Tesco operated outside the United Kingdom surpassed the amount it had in its home market for the first time, although the United Kingdom still accounted for more than 75% of group revenue due to lower sales per unit area outside the UK.

In September 2005 Tesco announced that it was selling its operations in Taiwan to Carrefour and purchasing Carrefour's stores in the Czech Republic and Slovakia. Both companies stated that they were concentrating their efforts in countries where they had strong market positions.

The following table shows the number of stores, total store size in area and sales for Tesco's international operations. The store numbers and floor area figures are as at 23 February 2008 but the turnover figures are for the year ended 31 December 2005, except for the Republic of Ireland data, which is at 24 February 2007, like the UK figures. This information is taken from the Template:PDFlink.

Country Entered Stores Area (m²) Area (sq ft) Turnover (£ million)
China People's Republic of China 2004 56 465,258 5,008,000 552
Czech Republic Czech Republic 1996 108 430,420 4,633,000 807
France France 1992 1 1,400 16,000
Hungary Hungary 1994 125 513,196 5,524,000 1,180
Republic of Ireland Republic of Ireland 1997 104 232,351 2,501,000 1,683
Japan Japan 2003 144 39,577 426,000 287
Malaysia Malaysia 2002 26 213,212 2,295,000 247
Poland Poland 1995 334 698,910 7,523,000 1,135
Slovakia Slovakia 1996 65 270,441 2,911,000 498
South Korea South Korea 1999 142 556,118 5,986,000 2,557
Thailand Thailand 1998 532 847,462 9,122,000 1,326
Turkey Turkey 2003 79 180,789 1,946,000 256
United States United States 2007 76 18,288 (est.) 60,000 (est.)
Total 1,792 4,467,422 43,408,258 10,528 (exc USA)

Ireland

Main article: Tesco Ireland

Tesco operated in the Irish grocery market in the early eighties, however sold its operations there in March 1986.[12]

Tesco re-entered the Irish market in 1997 after the purchase of Power Supermarkets Ltd. It now operates from 101 stores across Ireland. Like Tesco stores in the UK, these offer a home delivery shopping service available to 80% of the Irish population as well as petrol, mobile telephone, personal finance, flower delivery service and a weight-loss programme.[13] Also available is Tesco's loyalty programme, the Clubcard.

Tesco is now the grocery market leader in the Republic of Ireland, with a reported November 2005 share of 26.3%.[14] Tesco Ireland also claims to be the largest purchaser of Irish food with an estimated €1.5 billion annually.[15]

South Korea

Tesco launched its South Korean operations in 1999 and partnered with Samsung, Tesco holds 81% of the shares in the venture.[16] It operates both hypermarkets and its express format as well as a home delivery shopping service. It is the largest foreign food retailer in South Korea, although significantly behind its local rivals such as Lotte, and Shinsegae Group.[17]

On 14 May 2008, Tesco agreed to purchase 36 hypermarkets with a combination of food and non-food products from E-Land for $1.9 billion (£976 million) in its biggest single acquisition, making Tesco the second largest in the country. The majority of the E-Land stores formerly belonged to French retailer Carrefour before 2006 and most of the stores will be converted to Tesco Homeplus outlets. Tesco's South Korean discount store chain, Home Plus, currently has 66 outlets[18][19].

United States

A Fresh & Easy store in Summerlin, Nevada, United States
Main article: Fresh & Easy

In February 2006, Tesco announced its intention to move into the United States market, opening a chain of convenience stores on the West Coast (Arizona, California and Nevada) in 2007 named Fresh & Easy.[20] The company established its U.S. headquarters in El Segundo, California at 2120 Park Place. The first store opened in November 2007 with 100 more expected in the first year. They plan to open a new one every two-and-a-half days in America, to mimic the successful expansion of pharmacy chains such as Walgreens in the U.S.

The first Tesco Fresh & Easy Neighbourhood Markets opened in Hemet (Riverside County), Anaheim (Orange County), Arcadia (Los Angeles County), West Covina (Los Angeles County) and Upland (San Bernardino County), California in 2007.

Fresh & Easy operates 100 stores in the United States.

Other

China

Tesco entered China by acquiring a 50% stake in the Hymall chain from Ting Hsin of Taiwan in September 2004. In December 2006 it raised its stake to 90% in a £180 million deal.[21] Most of Tesco China's stores are based around Shanghai, but according to Tesco it plans to equip the business to expand more quickly and in different areas. Tesco has been increasing its own brand products into the Chinese market as well as introducing the Tesco Express format.[22]

Czech Republic
A Tesco store in Hradec Králové, Czech Republic

Tesco opened its first store in the Czech Republic in 1996 and now has over 84 stores, with further planned.[23] Tesco opened its first stores in the Czech Republic by buying US corporation Kmart's operations in the country and converting them into Tesco stores. Tesco is also keen to expand non-food items and has already opened petrol stations and offers personal finance services in the Czech Republic.[24]

France

Tesco have a "Vin Plus" outlet in Calais, selling wine, beer and spirits.[25]

Hungary

Tesco launched in Hungary in 1994 after purchasing KMart's operations in the area. It also opened its first hypermarket in Hungary in the same year. Tesco operates through 101 stores in Hungary with further openings planned.[23] Tesco offers its value, standard, healthy living and finest range in its stores. Tesco Hungary also offers a clothing line and personal finance services.[26]

Japan

Tesco Japan first began operations in 2003. It was brought about by a buy-out of C Two stores for £139 million in July 2003 and later Fre'c in April 2004.[27] Tesco has adopted an approach which focuses on small corner shops operating similarly to its Express format rather than opening hypermarkets. It has also launched its range of software in Japan.[23]

Malaysia
A Tesco outlet in Bandar Bukit Tinggi, Klang, Malaysia.

Tesco opened its first store in Malaysia in May 2002. Tesco partnered with local conglomerate Sime Darby Berhad which holds 30% of the shares.[28] Tesco also acquired Makro, a local wholesaler which was rebranded Tesco Extra and provides products for local retailers. Tesco Malaysia offers a value range, own branded range, electronic goods, the loyalty clubcard and clothing. On 31 January 2007, Tesco announced that it was purchasing Makro and converting and refurbishing all its stores to a new format called Tesco 'Extra'. [1] It is not known whether the format will be similar to Tesco UK's format.

Poland
A Tesco Hypermarket in Prokocim, Poland

Tesco entered the Polish market in 1995. It currently operates from 280 stores and has plans to open even more.[23] Tesco Poland offers the value, healthy living and own branded line of products as well as regional produce, petrol, personal finance services and on-line photo processing. Tesco Poland is keen to promote its green credentials.[29]

Slovakia

Tesco Slovakia opened in 1996 as part of Tesco's international expansion aims. It now operates from 48 stores and has plans to introduce Tesco Express like local stores.[23] Tesco Slovakia has recently put great emphasis on organic products. However, Tesco Slovakia caused controversy amongst the Slovak government when it was found to have come foul of food safety laws in 2006.[30]

Thailand
Main article: Tesco Lotus

Tesco entered Thailand in 1998 and operates through 380 stores as part of a joint venture with Charoen Pokphand and named the operation Tesco Lotus. This partnership was dissolved in 2003 when Charoen Pokphand sold its shares to Tesco. Tesco Lotus sells a diverse range of products from value food products to electronics to personal finance services. The company is keen to promote its green values and has partnered with the UNEP. Tesco Lotus claims to serve 20 million customers every month and that 97% of its goods are sourced from Thailand.[31]

Turkey

Tesco entered Turkey in 2003 and uses the trading name "Kipa". Tesco remains focused on building infrastructure in Turkey to complete its expansion plans and has already introduced the Tesco Express format into Turkey. There are plans to increase the rate of expansion as basic infrastructure is built.[23]

India

Tesco recently announced plans to invest an initial £60m ($115m) to open a wholesale cash-and-carry business based in Mumbai. Tesco's new wholesale operation will also supply the Tata Star Bazaar stores. Overseas companies are only allowed to open wholesale, licence or franchise arrangements. If the legislation were to change, Tesco announced they would open their own consumer retail business. [2][3][4][5][6]

Former markets

In September 2005, Tesco sold its stores in Taiwan to Carrefour.

Although Tesco currently owns one store in France, it previously owned a French chain called Catteau between 1992 and 1997.

Financial performance

Tesco is listed on the London Stock Exchange under the symbol TSCO. It also has a secondary listing on the Irish Stock Exchange with the name TESCO PLC.

All figures below are for the Tesco's financial years, which run for 52 or 53 week periods to late February. Up to the 27 February 2007 period end the numbers include non-UK and Ireland results for the year ended on 31 December 2006 in the accounting year. The figures in the table below include 52 weeks/12 months of turnover for both sides of the business as this provides the best comparative.

52/3 weeks ended Turnover (£m) Profit before tax (£m) Profit for year (£m) Basic earnings per share (p)
23 February 2008 47,298 2,803 2,130 26.95
24 February 2007 46,600 2,653 1,899 22.36
25 February 2006 38,300 2,210 1,576 19.70
26 February 2005 33,974 1,962 1,366 17.44
28 February 2004 30,814 1,600 1,100 15.05
22 February 2003 26,337 1,361 946 13.54
23 February 2002 23,653 1,201 830 12.05
24 February 2001 20,988 1,054 767 11.29
26 February 2000 18,796 933 674 10.07
27 February 1999 17,158 842 606 9.14
28 February 1998 16,452 760 532 8.12

As of its 2006 year end Tesco was the fourth largest retailer in the world behind Wal-Mart, Carrefour and Home Depot. Tesco moved ahead of Home Depot during 2007, following the sale of Home Depot's professional supply division and a decline in the value of the U.S. dollar against the British Pound. METRO was only just behind and might move ahead again if the euro strengthens against the pound, but METRO's sales include many billions of wholesale turnover, and its retail turnover is much less than Tesco's.

At 24 February 2007 Tesco operated 1,988 stores in the UK (2.581 million m², 27.7 million square feet) and 1,275 outside the UK (3.75 million m², 40.4 million square feet).

UK market share

Graph Showing Market Share of Tesco

According to TNS Worldpanel, Tesco's share of the UK grocery market in the 12 weeks to 10 August 2008 was 31.6%, up 0.3% on 12 weeks to 13 July 2008. The business' market share has been rising monthly since its recent low of 30.9% in March 2008. Across all categories, over £1 in every £7 (14.3%) of UK retail sales is spent at Tesco. Tesco also operates overseas, and non-UK revenue for the year to 24 February 2007 was up 18% on 25 February 2006

Supermarket Consumer
Spend (£000s) 		Market Share
August 2008 		+/- from
July 2008
Tesco 6,351,531 31.6% Increase 0.3%
Asda 3,410,431 17.0% Increase 0.1%
Sainsbury's 3,175,543 15.9% Increase 0.1%
Morrisons 2,233,137 11.1% Decrease 0.2%

Tesco litigation

As with any large corporation, Tesco is involved in litigation, usually from claims of personal injury from customers, claims of unfair dismissal from staff, and other commercial matters. Two notable cases were Ward v Tesco Stores Ltd, which set a precedent in so called 'trip and slip' injury claims against retailers; and Tesco Supermarkets Ltd v Nattrass, which reached the House of Lords, and became a leading case regarding the corporate liability of businesses for failures of their store managers (in a case of misleading advertising).

Criticism

Main article: Criticism of Tesco

Tesco has been criticised for aggressively pursuing critics of the company in Thailand. Writer and former MP Jit Siratranont is facing up to two years in jail and a £16.4m libel damages claim for saying that Tesco was expanding aggressively at the expense of small local retailers. Tesco served him with writs for criminal defamation and civil libel.[32]

Criticism of Tesco includes allegations of stifling competition due to its undeveloped "land bank",[33] pugilistically aggressive new store development without real consideration of the wishes, needs and consequences to local communities,[34] using cheap and/or child labour,[35][36] opposition to its move into the convenience sector[37] and breaching planning laws.[38]

A recent criticism from 2007 occurred when Tesco failed to deliver groceries via online shopping to a university campus in Sussex, offering no refund or apology. This sparked a local backlash from many customers who had similar dissatisfying experiences with Tesco's online delivery service.[39]

In December 2006 The Grocer magazine published a study which named Tesco as having the slowest checkouts of the six major supermarkets. Somerfield had the shortest queues with an average wait of 4 min 23 seconds. In order of least time spent at the checkout, the other major supermarkets were Waitrose, Sainsbury's, Asda, Morrisons.[40]

The Grocer also named ASDA as the cheapest UK supermarket (based on 33 items). Tesco was second and Sainsbury's and Morrisons joint third.[40] Tesco price check tends to differ saying out of 7134 (compared to ASDA) products, (Survey carried out between 09 July 2007 and 11 July 2007) Tesco is cheaper: 1835 (compared to 1251 the previous week), Tesco is more expensive: 975 (compared to 984 the previous week) and Tesco is the same price: 4324 (compared to 4996 the previous week).[41]

Tesco received criticism for bureaucratic and inflexible parking systems in its Bloomfield store in Dublin, Ireland. [42]

Further reading

  1. Simms, Andrew (2007). Tescopoly: how one shop came out on top and why it matters. London: Constable. ISBN 1845295110. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  2. Humby, Clive (2006). Scoring points : how Tesco continues to win customer loyalty. London & Philadelphia: Kogan Page. ISBN 9780749447526. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  3. Nash, Bethany (2006). Fair-Trade and the growth of ethical consumerism within the mainstream : an investigation into the Tesco consumer. Leeds: University of Leeds. ISBN 75272130. {{cite book}}: Check |isbn= value: length (help); Cite has empty unknown parameter: |coauthors= (help)

See also

References

  1. ^ YahooUK Finance - Tesco Profile (Accessed 11/May/2008)
  2. ^ "2008 Global Powers of Retail report". Deloitte. Retrieved 2008-03-10.
  3. ^ "Tesco DVD Rental". Tesco. Retrieved 2006-07-27.
  4. ^ a b Andrew Foxwell and Lauren Mills (2007-05-13). "'Green' Tesco's Swiss tax dodge". Mail on Sunday.
  5. ^ "Tesco's £1bn tax avoiding plan - move to the Cayman Islands (legal action/article removed from Guardian web site)". The Guardian. 2008-02-27. Archived from the original on 2008-02-27. {{cite news}}: Unknown parameter |authors= ignored (help)
  6. ^ Patrick Wintour (2008-02-28). "(legal action/article removed from Guardian web site)". The Guardian.
  7. ^ a b "Tesco and tax: a complex web of companies, trusts and partnerships". The Guardian. 2008-05-03.
  8. ^ a b c David Leigh (2008-06-14). "Government outlaws tax avoidance schemes". The Guardian.
  9. ^ Richard Murphy (2008-06-01). "Tescos: the Zug deal is tax avoidance".
  10. ^ Tesco moves into software market, BBC News, 1 October 2006
  11. ^ Template:PDFlink
  12. ^ "Tesco withdraws from Ireland". The Guardian. Guardian Newspapers. 1986-03-27. {{cite news}}: |access-date= requires |url= (help)
  13. ^ "Food and Grocery Shopping, Tesco Ireland". Tesco Ireland. 21 April 2008.
  14. ^ "Tesco still commanding highest market share". RTÉ Business. 6 December 2006.
  15. ^ "About Tesco Ireland". Tesco Ireland.
  16. ^ "Tesco to expand in South Korea". Food Navigator Europe. 16 May 2001.
  17. ^ "Tesco builds Korean business". Food & Drink Europe. 19 January 2005. Tesco is the largest foreign grocery retailer in the country, Gregory said, and is third overall behind local players Lotte and Shinsegae. "Both these groups have sales more than double Tesco's, so while this acquisition is unlikely to close the gap significantly, it will help Tesco move away further from the chasing pack - such as Carrefour and Wal-Mart."
  18. ^ Tesco to buy 36 S.Korean stores
  19. ^ Tesco set to grow in South Korea
  20. ^ "Tesco to enter United States". Retrieved 2006-03-13.
  21. ^ TESCO EXTENDS PARTNERSHIP IN CHINA, London Stock Exchange's Regulatory News Service, 12 December 2006.
  22. ^ "Tescco Express rolls into China". The Times. 21 April 2008.
  23. ^ a b c d e f "Tesco Annual Review 2007" (PDF). Tesco Plc. 21 April 2008.
  24. ^ "Tesco Services". Tesco Czech Republic. 21 April 2008.
  25. ^ Tesco.com - The world's leading online grocery store and more
  26. ^ "Tesco Services". Tesco Hungary. 21 April 2008.
  27. ^ "Tesco pedals cautious path in Japan". The Guardian. 1 June 2004.
  28. ^ "Corporate information, Tesco Malaysia". Tesco Stores (Malaysia)Sdn Bhd. 21 April 2008.
  29. ^ "About Tesco Poland". Tesco Poland. 21 April 2008.
  30. ^ "Tesco falls foul of Slovak government". cee food industry. 2 May 2006.
  31. ^ "Key facts about Tesco Lotus". Tesco Lotus. 21 April 2008.
  32. ^ Writers criticise Tesco for 'chilling' Thai libel actions
  33. ^ "UK grocers face competition probe". BBC. 2007-01-22. Retrieved 2007-02-21.
  34. ^ "Stop Tesco St Albans". Example aggrieved local community. April 2007.
  35. ^ "UK firms 'exploiting Bangladesh'". BBC. 2006-12-08. Retrieved 2007-02-21.
  36. ^ Islam, Faisal (2006-10-10). "Child labour making Tesco clothes". Channel 4 News. Retrieved 2006-12-10.
  37. ^ "Regulators continue to mull Adminstore acquisition". Retrieved 2006-08-20.
  38. ^ "Tesco 'breaching planning laws'". BBC. 2006-08-18. Retrieved 2007-02-21.
  39. ^ The Argus Newspaper[specify], 25 May, page 27.
  40. ^ a b "Tesco Till 'Slowest'". The Mirror. Trinity Mirror. 2006-12-20. Retrieved 2006-12-22.
  41. ^ "Tesco.com Pricecheck". Tesco. Tesco. 2007-07-11. Retrieved 2007-07-13.
  42. ^ "No budging on car park ticket". The Irish Times. 2008-03-31. Retrieved 2008-03-31.
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