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Tesco eyes F&F clothing expansion

UK supermarket retailer Tesco has confirmed to just-style it is planning to expand the F&F clothing offer in its larger stores as it continues to repurpose space by extending categories that meet a "unique" customer demand.

Tesco management announced the news to investors and analysts at a Capital Markets Day presentation on Wednesday (19 June).

The retailer is currently engaged in a turnaround plan and revealed several initiatives to maximise efficiency savings and grow revenue – including optimising space, cutting costs and growing profitable categories. One such category is its F&F brand, a GBP1.7bn (US$1.5bn) business for the group.

Dave Lewis, CEO of Tesco, said: "42% of our customers have to drive more than 10 minutes to get a credible F&F offer. We've identified 67 stores where we could repurpose general merchandising space for clothing and bring a compelling clothing offer closer to them."

The supermarket group has also launched a range of F&F products on Next.com's website, following the closure of its Tesco Direct website last year.

"General merchandise has been a problem for Tesco for some years culminating in the closure of Tesco Direct," notes Clive Black, analyst at Shore Capital. "'F&F' is a GBP1.7bn brand (GBP1.2bn in the UK) with a 10% EBIT margin, with Tesco seeing opportunity to increase space in large stores and increase penetration across smaller stores including its UK convenience stores (CVS) whilst management is particularly pleased with the launch on the Next online platform, so partially mitigating the Direct closure."

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