Tesco reported a 3.5% increase in like-for-like sales, excluding fuel, for the 13 weeks to 24 May and admitted the rate of growth in non-food had eased.
Analysts were concerned like-for-likes had slipped from 4% in the previous quarter and lagged behind rivals such as Morrisons which last week reported like-for-like sales growth of 7%, but pointed out that the figures were still within market expectations.
“Tesco is a victim of its own success, Geoff Ruddell, an analyst at Morgan Stanley told The Times. “It has down so well for so many years and enjoys much higher sales densities but now everyone else has got their act together and it appears Tesco is slowly being pulled back into the pack.”
Analysts at Citigroup said in a note: “We should remember that the first five weeks were helped by easy comparatives from the fuel contamination crisis in March 2007. Profits are on track for the quarter and Tesco seems on track to deliver the consensus forecast of 3.5% UK like-for-like sales for 2008-09 given easing comparatives and improving weather.”