Tesco has unveiled like-for-like sales growth of just 2% for the past quarter, excluding petrol sales, confirming the supermarket giant’s worst performance for more than a decade.
Tesco blamed sluggish non-food sales in “very subdued conditions” for holding back its growth as total UK sales increased by just under 6% over the three month to 22 November.
Total group sales increased by 11.7% for the period, with chief executive Sir Terry Leahy hailing a “particularly strong performance” from the retailer’s international division.
Tesco, whose share price has dropped by almost 40% in 2008, also said it had achieved additional savings of £90m this year above existing cost-cutting targets.
“We are pleased with our progress but we are also realistic,” said Leahy. “The current economic climate and the strain this is putting on consumers everywhere is something that all businesses are feeling, including ours.
“Overall, double-digit sales growth has continued, with International delivering a particularly strong performance, despite slowing demand in some European markets. The UK has again done well – with 300,000 more customers a week and improving volume growth in our core food categories, driven by the early success of our new 'Discounter' products and related changes – and with non-food sales holding steady.”
He added: “We are adjusting the business to meet the new challenges – focusing on becoming even cheaper for customers, keeping our costs low to help us to do this and managing our balance sheet and cash carefully.”
Meanwhile, ‘switching’ data from TNS Worldpanel shows that £22m was diverted from Tesco tills to those of arch rival Asda in the three months to 2 November.
A further £10m went from Tesco to discounter Aldi, while Morrisons took a similar amount. However, Lidl made little impression on the UK’s largest retailer, while Tesco actually took market share from fellow discounter Netto.
Sales at Tesco grew by 5% over the period, well behind Asda and Morrisons, which both showed improvements of around 9%. Sainsbury’s charted sales growth of 6% for the 12-week period.
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