Depending on how you look at it – the greatest commercial success on Britain's high street or the destroyer of small farms and local shops will report its profits tomorrow.
Few companies divide people like Tesco. Like it or loathe it, you cannot ignore Sir Terry Leahy's sprawling empire – I've tried it, but wherever I went there seemed to be either a superstore, Metro or one of the really huge megastores about.
While we should be applauding its mega success as one of Britain's biggest employers and big boys on the international retail scene, its sheer size makes many – including me – a little uneasy.
When you get that dominant many of the rules of competition cease to apply. Don't like Tesco – don't go there – but when you can't find anything else, it is quite hard.
It can be a cause for alarm with many people protesting about the firm's alleged power to influence councils and railroad suppliers into ever lower prices.
This week Tesco is poised to get a whole lot worse with annual profits expected to rise to more than #2.5 billion – more than #4,800 a minute.
While the drama of the abandoned private equity bid for rival Sainsbury’s has recently dominated attention in the sector, the giant has also come under fire itself for its domination of the market.
The latest figures from TNS market research panel showed Tesco expanding its share of the grocery market to 31.2 per cent in the 12 weeks to March 25.
Tesco launched a robust defence of its position in its response to the Competition Commission’s inquiry into the #95 billion grocery sector earlier this month, amid accusations that it was squeezing out local stores and creating a series of "Tesco towns".
The company argued that the grocery market was now "national" and not local as shoppers increasingly buy online and are prepared to travel further to visit a store. Aside from grocery sales the supermarket’s sales of cheaper entertainment products like CDs and DVDs has also put pressure on high street retailers such as HMV and Woolworths. Last October it even launched its own brand of computer software.
While the controversy over its domination continues, analysts believe that the size of the company and its strong asset base will protect it against any tightening in consumer spending during 2007. Forecasts predict that the retail chain will increase pre-tax profits by 12% to #2.54 billion for the 12 months to February 24, with sales ahead 10% at #42.7 billion.
The group’s network of more than 1,400 UK stores is predicted to deliver the bulk of the firm’s profits with estimated trading profits of #1.92 billion.
And this year the company will embark on its entry into the US market – meaning that the UK’s biggest food retailer could enter a dramatic new phase of growth.
Panmure Gordon’s Philip Dorgan said he saw the potential for Tesco to treble its sales from the #38.4 billion reported last year to #110 billion within 10 years.
Like it or loath it – it seems we can't stop shopping at Tesco.
