Tesco will not be undertaking a fresh wave of acquisitions in the convenience sector despite receiving the green light from the Competition Commission.
Speaking this week after the multiple announced an 11.8% increase in pre-tax profit to £2.8bn for the 52 weeks to 23 February, company secretary Lucy Neville-Rolfe said it was encouraging that the commission viewed Tesco and Sainsbury's entry into convenience as positive.
However, she said any further acquisitions would still be scrutinised by regulators. This, she said, would make organic growth of Tesco Express much more likely than taking the acquisition route.
"We are looking to spread our roll-out across the country so what makes sense from a business point of view is to grow organically," she said.
Following the publication of the commission's provisional findings in October, industry watchers warned of a potential shopping spree by the multiples. The last significant purchase was Sainsbury's acquisition of Shaws in 2005, before the current groceries inquiry started.
Tesco had broadly welcomed the findings of the commission thus far, said Neville-Rolfe, but still had some issues regarding the possible introduction of a competition test for planning decisions. She would not comment on Tesco's interest in Somerfield, which is up for sale, but said that such a test could jeopardise any attempts on Tesco's part to snap up a chunk of stores.
Meanwhile, Tesco chief executive Sir Terry Leahy fended off the recent negative publicity surrounding its US venture Fresh & Easy Neighborhood Market. Sir Terry said it remained on target to break even in the second full year of trading. This was despite an expected rise in trading losses this year at Fresh & Easy from £62m to about £100m.
"The US start-up costs are a lot higher because we loaded up up-front in terms of senior management and systems," said Sir Terry. This was necessary given the maturity of the market and speed at which Tesco was developing there, he said.