Tesco sales dip for fourth quarter

 

The UK's biggest supermarket Tesco reported falling sales for the fourth quarter in a row today despite its £500 million price-cutting campaign.

In the UK, where it has 2,700 stores, Tesco recorded a 0.9% decline in like-for-like sales excluding VAT and petrol in the 13 weeks to November 26, equal to the drop seen in the previous quarter.

Despite the decline, the grocer insisted the results of its Big Price Drop, which saw the cost of 3,000 everyday products slashed, were "promising" as food volumes rose by a whole percentage point, offsetting the deflationary impact of its price cuts.

Elsewhere, Tesco saw a significant slowdown in Asia, which has driven the overall group performance in previous months, where like-for-like sales grew 0.8%, compared with 3.9% in the second quarter, as the impact of flooding in Thailand and warm autumn temperatures in South Korea and China took their toll.

Shares were down 1% after the trading update, which Kate Calvert, retail research analyst at Seymour Pierce stockbrokers, called "uninspiring".

She said Tesco's use of the word promising to describe the early results of its Price Drop strategy was not "particularly encouraging language".

Tesco covered its price cuts by slashing the number of multi-buy promotions and scrapping its double Clubcard points reward offer.

The offensive triggered an aggressive response as competitors responded with their own schemes, such as Sainsbury's Brand Match campaign and Asda's move to bring petrol prices down.

Tesco's market share slipped to 30.5% in the 12 weeks to November 27, from 30.7% a year ago, researchers Kantar Worldpanel said this week, but customer numbers were still up.

Chief executive Philip Clarke said: "Times are tough for a number of our customers at home and in a number of our international markets."

The grocer said it had seen an improvement in the decline in its like-for-like sales of non-food items, with strong performances in the home and electricals sectors offsetting a weaker show from CDs and home entertainment categories.

Tesco said it had seen strong performances in new stores, as total sales including VAT and petrol grew by 6.7% in the period, while online sales increased by 10%.

The group's Asian powerhouse market faltered in the quarter due to a number of temporary factors hitting sales.

In Thailand, like-for-like sales slowed from 7.5% to 1.4% as devastating floods forced the closure of 165 stores across the country.

Meanwhile, the warmest autumn in northern Asia for 75 years affected seasonal merchandise sales, particularly in South Korea, where same-store sales slowed from 0.9% growth to 0.3% and in China where like-for-like sales grew 3.4%, compared with 6.1%.

Its Europe division strengthened, with like-for-like sales up 0.9%, compared with 0.1% in the previous quarter, driven by Poland and Slovakia.

The loss-making US business, Fresh & Easy, which aims to break even by the end of the 2012/13 financial year saw like-for-like sales growth of 11.9% as customer numbers increased and average spend was higher.

PA

Independent Comment
blog comments powered by Disqus
Career Services

Day In a Page

The 50 Best beachwear

The 50 Best beachwear

The hottest summer gear for men and women
Still standing: George Galloway reveals why his staunchly Leftist outlook is still invariably right

Still standing: George Galloway

Written off, ridiculed, wrongly accused of taking bribes the honourable member for Bradford West, has never bowed to the critics.
How will Daniel Radcliffe's fans react to his latest turn - as a damaged, drug-taking Beatnik poet?

Daniel Radcliffe as drug-taking Beatnik poet

His decade as the boy wizard may be over, but that hasn't hexed Daniel Radcliffe's enchanted life.
For whom the bell tolls: £20m 'Memo' project takes shape on Dorset's Jurassic coast

'Memo' project takes shape on Dorset coast

It started as a stonemason's visionary idea – to commemorate all the species that have ever existed and are now extinct.
Just add sunshine: Bill Granger's Turkish delights

Just add sunshine: Bill Granger's Turkish delights

Turkish cuisine is perfect for those long, sociable weekend meals with friends. It's just a shame that money can't buy the key ingredient.
Objets czar: David Usborne’s collection of myriad objects is quite the mystery

Objets czar: David Usborne’s collection of myriad objects

To others, they're junk. To David Usborne, they are his life: useful gizmos, mysterious thingamajigs and anonymous articles that dominate his home.
The iron ore lady: Why the world's richest woman is mired in controversy

World's richest woman: Gina Rinehart

Family feuds, attempts to control the Australian media and bitter public disputes are keeping the mining magnate in the headlines.
We just click: How Lego keeps building on its success

How Lego keeps building on its success

This year, Lego announced record profits. Gerard Gilbert visits its Denmark HQ.
The other bits: Mark Hix creates delicious and economical meals with cheaper cuts of meat

Mark Hix cooks with cheaper cuts of meat

Our chef creates delicious and economical meals on a budget
Strokes of genius: How to create summer's bold make-up look

Strokes of genius: Summer's bold make-up

From coral lips to fly-away fringes, make-up artist Kim Brown and hair stylist Richard Scorer reveal how to create the look
Marking his territory: Kilian Hennessy creates fragrances designed to provoke the senses

Marking his territory: Kilian Hennessy

The perfumer creates fragrances designed to provoke the senses
Photo essay: Britain's 1948 Olympians today

Britain's 1948 Olympians today

Photo essay
The top five E3 2012 triumphs: From Ubisoft's suite of titles to Dishonored and The Last of Us

The top five E3 2012 triumphs

The games and moments that left us grinning like the Cheshire Cat
The green movement at 50: Can the world be saved?

Can the world be saved?

Population growth and climate change are the big problems facing the earth in the next 50 years. But are there any solutions?
France: Will xenophobia go mainstream?

France: Will xenophobia go mainstream?

In the beautiful Rhone delta, John Lichfield visits a village where a dangerous new political landscape is taking shape