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Tesco targets Net sales
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April 11, 2000: 9:43 a.m. ET
Largest U.K. supermarket posts 8% rise in pretax profit, separates online unit
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LONDON (CNNfn) - Tesco, Britain's largest supermarket chain, Tuesday announced an 8 percent increase in full-year earnings, at the top end of analysts' expectations, and said it plans to double its online sales this year.
The U.K. retail market has become a battleground since the entry of Wal-Mart Stores (WMT: Research, Estimates) last year, when the world's largest retailer bought third-ranked British grocery company Asda.
However, Tesco has diversified by expanding its overseas and Internet sales - claiming to be the world's largest online grocer - and has started offering financial services and Web access.
 The company reported pretax earnings of £955 million ($1.51 billion) for the 12 months to Feb. 26, up from £881 million a year earlier. Forecasts of analysts polled by Reuters ranged from £940 million to £955 million.
Sales climbed 10.3 percent to £20.4 billion, of which £2 billion was generated from overseas. In the U.K., Tesco reported sales growth of 4.2 percent on a like-for-like basis. Tesco has 639 stores in Britain and 162 in central Europe and Asia.
"Tesco has never been in better shape," chief executive Terry Leahy said in a statement. "Our core U.K. business has proven to be strong and has responded well to challenging conditions."
Net sales 'to double'
Tesco is viewed by analysts as among the most innovative U.K. retailers and was the first of the major chains to introduce programs to foster customer loyalty, smaller inner-city stores and Net-based shopping.
The company said its online shopping arm generated sales of £125 million last year and has 400,000 registered users through its dedicated ISP. It aims to raise sales to between £300 million and £350 million this year.
Tesco plans to split the Web business from the rest of the company, to allow Tecso.com to operate as a standalone unit in which it will invest £35 million this year. However, it played down speculation that the unit would be floated.
Tesco (TSCO) shares were up 2.1 percent at 211 pence at midday in London Tuesday, raising its market capitalization to about £14.5 billion.
U.K. retail stocks have fallen out of favour with investors because of the threat the supermarket price war's might pose to earnings, although Tesco has outperformed its peers by 22 percent over the past year. The consolidation in the sector has also prompted a review by government competition officials into the impact on suppliers and customers of the four largest supermarket chains. 
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Tesco
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