Tesco threatens non-food fight with Asda

Announcing a 9% rise in annual pre-tax profit today, Tesco now looks set to lock horns with Asda over the non-food market.

Tesco threatens non-food fight with Asda

In the year to February, pre-tax profits at Tesco hit £3.2bn on sales up 6% to £56.9bn, the retailer said. And it confirmed its commitment to a continuing rollout of its standalone non-food format, Homeplus – despite having dragged its feet on new openings.

Tesco refused to say how many Homeplus outlets it hopes to have: there are currently 13.

Meanwhile, Asda confirmed last week that it is pressing ahead with its goal to have 150 Asda Living stores by 2015. The Wal-Mart owned supermarket currently has 25 of the dedicated homewares outlets, but aims to take over the No 1 non-food retailer position from Tesco.

Asda’s annual non-food sales are currently worth around three-quarters of Tesco’s.

Bryan Roberts, global research director at Planet Retail, told The Independent that Homeplus had not “lived up to expectations. If Tesco feels like something has legs they will go for it.”

Other commentators say that Asda will have to make a major acquisition if it is to achieve its goal of non-food leadership. Recent reports speculated that a takeover of Argos and Homebase parent Home Retail Group could be in the offing.

In announcing its results today, Tesco chief executive Terry Leahy said: “Our positions in international markets and non-food meant we faced strong headwinds when the downturn came, but it will be these parts of our business which will grow fastest as the recovery strengthens.”

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