TESCO'S sales in the Republic increased by 18% in the six months to the middle of August, company executives told stock market analysts last week. Sales in the Republic were up 18% to 999m excluding VAT.

Tesco is benefitting from a huge increase in its store network in the Republic and the impact of its new petrol stations as like-for-like sales were up just 6% during the period.

The company has added more than 20% to its retail space in the Republic in the past two years, and Tesco chief executive Terry Leahy has indicated that the group now wants to improve the remainder of its original Quinnsworth stores. When Tesco bought Quinnsworth/ Crazy Prices in 1997, its full year sales were 1.1bn.

A number of analysts believe the Irish division remains the group's most profitable, despite Tesco management claiming that its profit margin in the Republic is lower than its UK operation.