Tesco mulls launching ‘Finest’ stores in bid to double profit margins

The retailer laid out plans for these stores to investors and analysts at its Capital Markets Day yesterday and showed an illustration of a ‘Finest’ branded store selling its premium range, as well as a café according to the FT.

The grocer suggested to analysts that such stores could generate an estimated operating profit margin of around 7%, which is twice what the business is currently making.

Tesco boss Dave Lewis is also reported to have told analysts that his focus for the future would be on total sales, rather than like-for-like growth and on cash generation over profits. 

The retailer’s Clubcard loyalty scheme could also be expanded into a subscription service offering discounts in-store, as well as redeemable points. 

Another idea being widely reported was micro-fulfilment centres for online grocery orders and automated robots to deliver them. 

Tesco has had a steady start to the year with its like for likes inching up in its first quarter, as sales continue to be driven by its merger with Booker. 

UK and Ireland sales rose 0.8% on a like-for-like basis and 1.3% on a total basis, reaching £11.16bn. However, UK total sales dipped 0.4%, though like for likes rose 0.4%.