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Checkout at 40: Three Guys Blot On Tesco’s Superb Performance (July 1979)

Published on May 5 2015 11:58 AM

Checkout at 40: Three Guys Blot On Tesco’s Superb Performance (July 1979)

This year, Checkout commemorates its 40th anniversary under its current owners, and with this in mind, every week, Retail Intelligence is going to ‘reel in the years’ and publish a story from our extensive archives. This article from July 1979 examines the challenges facing Tesco on its first arrival into the Irish market.

With second-half figures from Tesco now available, they show an increase in pre-tax profits from £18.28m to £23.87m, giving taxable profits to the year ended February 24th 1979 of £37.66m, which gives the group an overall profit rise of 31.9%.

Turnover reached £1,235,902,000. The only dark spot on the horizon for the brilliant young Tesco Managing Director, Mr Ian MacLaurin, is the fact that Three Guys continue in a loss-making situation. The Three Guys figures show that their Irish company was losing £4,000 a week for the 10 weeks from December 12th, 1978, and Tesco are understandably concerned at the cost of funding the interests on their borrowings, which currently stand at around £7m and which are likely to rise with their planned extension programme.

Acting Managing Director of the Irish Company, Ceri Mason has a very tough task on his hands. The increased borrowing rates in Ireland put further pressure on Mason and his colleagues, and the question is now; can Three Guys begin to project a much more formidable and attractive image to the Irish consumer?

With current turnover of somewhere between £15-£18m based on the 10-week figures, one begins to see the size of the task confronting Three Guys, and on a £15m turnover at a 2% net figure (which one presumes is a reasonable figure for the Irish supermarket operators), one is talking of profits of £3000,000 pre-tax against an investment of £7m – although there will be the advantage of tax losses forward which one assumes Tesco acquired when they purchased the Gubay operation.

The job now facing the Three Guys/Tesco management is to quickly achieve a much bigger share of the Irish market and we hope in a coming issue to take an in-depth look at how Ceri Mason plans to tackle this problem.

© 2015 - Checkout Magazine

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