Tesco, the UK’s biggest supermarket retailer, on Wednesday delivered growth at the low end of expectations as it saw like-for-like sales in its core market grow by 4.5 per cent.
But analysts said it had still delivered a creditable performance given that it was up against strong comparisons.
In the domestic market, which still accounts for the bulk of its turnover, sales grew 9 per cent for the thirteen weeks ending May 27. Like-for-like sales excluding petrol were affected by deflation of 1.4 per cent. Like-for-like sales including petrol grew by 5.5 per cent.
Darren Shirley, analyst with Shore Capital, said: “This is at the lower end of expectations but this performance is still growth on growth. We were looking at like-for-like growth of about 7 per cent last time and about 8 per cent the year before that and comes after two years of super-normal growth, aided by the fact that their competitors were in a bit of a mess.”
Other analysts pointed to the fact that deflation in the core supermarkets business, excluding petrol which remains inflationary, was relatively high at 1.4 per cent . Analysts with Cazenove said in a note: “”the implication is that competition remains tough but Tesco’s like-for-like volume growth remains impressive.”
Terry Leahy, chief executive, who has overseen two years of high growth rates as the supermarket’s competitors have faltered, said: “We’ve made a good start to the year across the group. International is showing strong growth and pushing on well with new store development and the UK has made solid progress on top of two years of exceptional performance.”
Group sales for the thirteen weeks ending May 27 increased by 10.4 per cent. International sales rose by 15.3 per cent and by 15.1 per cent at constant exchange rates.
The company said it was on track to deliver its largest ever programme of new store openings this year, adding 6m square feet of new selling space in international. A further 1m square feet will be added through the acquisition of the 11 Carrefour stores in the Czech Republic.
Like-for-like figures strip out the effects of new store space.
Shares in Tesco were down 6 ¾p or 2 per cent in early trade.
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