Tesco, Britain's biggest supermarket chain, has reduced spending on new schemes and stores in a bid to reduce its costs in the recession.
In its full year results today for the year to 28 February it revealed sales had reached £1bn a week with profits for the year at a new record of £3.13bn.
But it said it is: ‘reducing UK capital spend on large mixed-use development schemes...allowing UK capital expenditure to revert to the levels of four years ago.’
It said it had also bought fewer stores from competitors to reduce costs.
Despite the slow down in expansion in the UK it said it would still add between 6% to 7% to its UK selling space each year.Across the group it plans to open over 8m sq ft of new group space this year - 75% of this outside the UK. It said this growth is 9.2% more than last year, using £1bn lower capital expenditure.
It is continuing its plans to sell off freehold property to pay off its large debt.
Three years ago it announced plans for a £5bn property sell off programme ‘to release cash from property through a sequence of joint ventures and other sale and leaseback transactions’.
It said today: ‘We have managed the pace of this programme in light of the current financial and property market conditions, and as a result we have divested the property at attractive yields.’
The money raised is used to pay down debt, of which it currently has £9.6bn, with plans for this to reduce further.
Of the sale and leasebacks completed so far as part of the £5bn programme it said it had ‘delivered aggregate proceeds’ of £2.2bn.
In a statement it said: ‘Whilst yields have increased modestly in recent months, we expect to be able to complete further transactions on attractive terms in the months ahead and we are currently in discussion with potential counterparties.’
It has more than £24bn of freehold property on its books which it believes at current market value reaches £30.4bn, representing a 23% premium to book value.
In the UK sales increased by 9.5% to £41.5bn, including like-for-like growth of 4.3%.
Tesco’s record annual pre-tax profits hit £2.95bn, with underlying annual profit up 10% to £3.13bn. Sales increased by 13.5% to £59.4bn for the year.