Level 2

Tesco tears off to strong start as fresh food outperforms

By Oliver Haill

Date: Friday 16 Jun 2017

Tesco tears off to strong start as fresh food outperforms

(ShareCast News) - Tesco romped off to a strong start to its new financial year, with Britain's biggest grocer delivering first quarter UK sales ahead of City expectations despite current tough conditions for the wider retail industry.
With a sixth consecutive quarter of positive sales growth, UK like-for-like food sales climbed 2.7% and UK total LFL sales up 2.3%, versus a consensus forecast of 1.9%, saw group LFL sales increase 1.0%.

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

While in Asia the supermarket group was pleased to resolve its Korean capital gains tax issue, with no further amounts payable, LFL sales across the region were down 6% after discontinuing all unprofitable bulk selling activity in Thailand, with a 0.6% impact on group LFL sales.

But the core UK business is going great guns, with the beginnings of a third year of positive food volume growth and strong volume growth in fresh food at 1.6% that represents a significant market outperformance.

Online grocery sales grew 4.8% and Tesco Bank also increased sales 4.8%, helped by a significant increase in secured lending following the launch into the intermediary mortgage broker market in April last year.

Inflation played only a small part in the grocery gains, with chief executive Dave Lewis making pains to stress: "In tough market conditions, we have stayed true to our commitment to helping customers - working closely with our supplier partners to keep prices low.

"Customers have responded by doing more of their shopping with us and as a result we continue to grow volumes, particularly in fresh food."

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".


Email this article to a friend

or share it with one of these popular networks:

Top of Page