Tesco reports strongest United Kingdom sales growth for seven years

Xavier Trudeau
Juin 17, 2017

United Kingdom like-for-like sales in the first quarter of the year rose 2.3 per cent, driven by a 2.7 per cent comparable sales growth in food.

Across the combined United Kingdom and Irish business, LFL sales grew 2.2%, though European sales declined for the second quarter in a row, down 0.4%.

Mr Lewis said the supermarket giant had been "working closely with our supplier partners to keep our prices low".

Fresh food volumes grew by 1.6% in the quarter, underpinned by further improvements across our customer offer.

Tesco reported its sixth consecutive quarter of growth in a tough market but had to work hard to appease small shareholders unhappy about executive pay at its annual meeting.

There was not much comment on outlook, with Lewis reiterating his confidence in creating "long-term, sustainable value for our key stakeholders and to deliver on the ambitions we have set out".

Tesco's global same-store sales were down 3 per cent after it pulled out of unprofitable bulk selling of products such as tobacco and alcohol in Thailand, while Tesco Bank grew sales by 4.8 per cent.

The market share gains, however, contrast sharply with the broader United Kingdom retail backdrop, where overall spending fell at the fastest pace in four years last month, according to data published by the country's Office for National Statistics Thursday.

Like-for-like sales across the group rose one per cent, although Tesco was held back by a three per cent fall in comparable sales at its worldwide division.

"Food, and fresh food in particular, is firing on all cylinders, and that's a huge shot across the bows for its competitors", John Ibbotson, an analyst at industry researcher Retail Vision, said by e-mail.

He stabilised the business and then got it growing again with a focus on lower prices, new and streamlined product ranges, better customer service and much improved supplier relationships.

The number issued this week revealed that average earnings dropped by 0.6% in real terms in the three months to April, as pay rises were exceeded by rising inflation.

Industry consultant John Ibbotson of Retail Vision said it was "a corker" of a result for Tesco's core United Kingdom market.

The CMA is assessing whether the deal could reduce competition and choice for shoppers.

Like-for-like sales in the combined UK & ROI business grew by 2.2%. "Customer-centric decisions have helped grow sales in six quarters on the bounce".

In May the retailer announced a partnership with Dixons Carphone in which it is beginning to trial store-in-store operations across its estate.

Retailers are under pressure as consumers are squeezed by rising inflation and stuttering wage growth, while the post-Brexit vote slump in the pound drives up their costs.

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