19 October 2006 | Paul Snell
Supermarket giant Tesco credits better purchasing across Europe as a vital factor in boosting sales and profits.
Half-year sales figures released this month saw the retailer turn over £22.7 billion, an increase of more than 12 per cent on the previous 26 weeks of trading. Profits also increased to £1.09 billion before tax, an increase of more than 10 per cent.
Tesco said performance at stores in mainland Europe had been improved by better purchasing on the continent. "Pan-European purchasing of own-brand products and fresh produce have contributed to our competitiveness," it said. Sales in Europe grew by 21 per cent, and reached £3 billion.
A spokesman told SM
improved buying was essential to the company's success. "Buyers are a key element of the business plan. They are our first point of contact with suppliers and are a key part of our supply chain. Their main role is to secure a good deal with suppliers, but not at the expense of a healthy supply base."
To continue to improve relations with suppliers and source local products, the retailer also confirmed it is launching six new UK regional buying offices from next year. Five will be in England and one in Wales. Each office will employ one buyer and one marketing manager, backed by regional technical support.
The expansion has been prompted by success in two buying offices in Northern Ireland and Scotland.
Tesco hopes the programme will result in "hundreds of new local lines being stocked". The buying offices in Northern Ireland and Scotland each contributed 1,000 new products to stores.
Good news over profits was last week dampened by questions regarding Tesco's audit of overseas suppliers. It follows an undercover investigation by Channel 4 News
. The broadcaster alleges it found under-age children working in factories that manufacture clothes for the supermarket.
Tesco has refuted the claims. It said in a statement: "Tesco abhors the use of child labour and is at the forefront of industry efforts to stamp it out. Tesco immediately made unannounced visits to the suppliers concerned in conjunction with independent auditors. They found no evidence of any use of child labour."