In December 1994, we increased our stake in our French
subsidiary, Catteau, to 100%. Over the year, Catteau increased
its sales by 16.1% to £430m, with new stores contributing 15.3%
and existing stores generating growth of 0.8%. A sales decline
of 2.9% in existing stores in the first half turned into
positive growth of 4.1% in the second half. Investment in lower
selling prices, centralised distribution, retail operations
management and systems development all contributed to higher
sales and restricted operating margin growth to 0.1% in the
second half. These investments were planned because real volume
growth in existing stores and a modern retail infrastructure are
pre-requisites for profitable organic expansion in the future.
Operating profit of £16m for the full year compared to £8m for
the 31 weeks under Tesco control last year.
On 28 June 1994, we acquired 51.7% of the ordinary shares of
Global TH of Hungary. We subsequently purchased a further 5.3%,
taking the total Tesco stake to 57.0% at a cost of £15m. Global
is quoted on the Budapest stock exchange and operates 44
supermarkets in the north-west region of the country. With an
average size of 3,000 sq ft, the stores are small by British
standards. As a first step in our strategy to open larger
stores, a new, 14,000 sq ft store was opened in November in
Szombathely and we plan to open more stores of up to 20,000 sq
ft in the north-west and the well-populated Budapest area. Since
the acquisition, sales have been £16m with operating profit of
£1m, and an operating margin of 4.3%.
