Tesco tastes success with UK food sales growth
Retailer sees strong first quarter
Tesco has demonstrated that there is still market share to be taken from the UK food sector as it announced a 12.3 per cent rise in group sales across the three months to May 22.
Tesco has been looking mainly to non-food growth and expansion into new markets such as the convenience sector to drive its UK growth. The battle for market share of supermarket food has never been tougher, with Morrisons now competing strongly with Tesco and Asda on price since its acquisition of Safeway in March.
In that context, Tesco chief executive Terry Leahy said: “I am particularly pleased that our core UK food business has continued to grow market share and to perform very strongly in the first quarter.”
The company said its overall growth of 12.3 per cent, ahead of forecasts, has been driven by all four parts of its strategy, with growth in non-food market share alongside core food growth, further development of retailing services, ranging from insurance to telecoms, and international growth.
[img r]tescocustomersinstore.jpg[/img]Total UK sales across the quarter grew by 11.1 per cent, ahead of the industry average. Like-for-like sales were up 7.8 per cent. Like-for-like volume growth was 7.7 per cent, but Tesco confirmed that the latest supermarket price war has seen price deflation extend from food to non-food sales.
The company said: “Non-food goes from strength to strength and in our recent clothing sale we sold two and a half times more items than we did in the same period last year.” The quarter saw a TV advertising campaign for Tesco’s Cherokee clothing brand.
International sales were up 24 per cent in local currencies, but the impact of the strong pound reduced this to 18 per cent in sterling terms. Tesco said all countries have contributed to growth, “despite some continued tough trading conditions”.
