Tesco posts record £3.1 billion profit

By Mark Potter

LONDON (Reuters) - Tesco, the world's No.3 retailer, reported signs of stabilisation in some of its markets, boosting retail stocks as it beat forecasts with a 10 percent rise in profits to 3.13 billion pounds.

Shares in the supermarket group, which employs over 440,000 people in 4,000 stores across 14 countries, jumped as much as 5 percent on Tuesday as it posted improving sales in Britain and strong results from recently acquired stores in South Korea.

"We are seeing signs of stability in a number of markets," Chief Executive Terry Leahy told reporters.

But he added it was "too early to call it a recovery" and conceded Tesco had lost sight of when it expected to make a profit in the United States because of a deep recession there.

Tesco, which had planned for its U.S. Fresh & Easy chain to break even by March 2010, said it would open 60 to 70 stores there this financial year, taking the total to less than 200, or about half its original plan for that date.

Retailers across the world have been struggling as shoppers curb spending amid rising unemployment. France's Carrefour, the world's No.2 retailer, last week reported its first quarterly decline in sales for six years, hit by its exposure to weak western European markets.

British luxury goods group Burberry said revenue growth had slowed, though discount clothing chain Primark showed it was thriving.

Tesco said sales rose 15.1 percent to 59.4 billion pounds in the 53 weeks ended February 28, as solid growth in Britain and Asia offset weaker growth in the rest of Europe. The dividend was raised 9.7 percent to 11.96 pence.