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.
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