Supermarket chain Tesco Plc (TSCDY.PK,TSCO.L) on Monday reported a modest growth in first-quarter sales and said its performance in the UK has been steady during a challenging quarter for the industry as a whole. The company left its full-year outlook unchanged, noting it is performing in line with market expectations.
Philip Clarke, Chief Executive, said, "Tesco has performed robustly in the first quarter despite subdued consumer confidence in all our markets...Against the backdrop of continuing uncertainty in the Eurozone, it is pleasing to see that our businesses have largely sustained their performance."
Tesco has been going through hard times as high rate of unemployment and muted wage growth is forcing consumers to tighten spending. The firm reported dismal Christmas and New Year sales and issued a weak outlook in January.
In March, Richard Brasher, the chief executive officer of its UK operations, decided to leave the company after barely a year into the job, following a profit warning in January - the company's first in 20 years.
Tesco said today that group sales for the thirteen weeks ended May 26 increased by 2.2 percent both including and excluding petrol. At constant exchange rates, the growth was 3.8 percent including petrol and 3.9 percent excluding petrol.
Performance in the UK was as expected and total sales including Value Added tax, or VAT, and petrol grew 2.1 percent. The growth was 2 percent excluding petrol. Like-for-like sales in the UK, excluding VAT and petrol, reduced by 1.5 percent in the quarter.
In Asia, total sales grew 9.1 percent at constant rates and 9 percent at actual exchange rates, with positive like-for-like sales growth and contribution from new stores. All markets in Asia saw improvement in like-for-like sales compared to the fourth quarter of last year, except China which continues to experience slowing economic growth.
In Europe, total sales excluding petrol grew by 6 percent at constant exchange rates, but dropped 4 percent in actual rates. Like-for-like sales edged up 0.4 percent helped by improved performances in Poland, Slovakia and the Republic of Ireland, which reported its first full quarter of positive like-for-like sales growth since 2010.
Tesco said the week in the run up to the Diamond Jubilee turned out to be the biggest ever week outside of a Christmas period for the retailer, with over 1 billion pounds in sales.
Additionally, the firm confirmed that the final phase of migration for Tesco Bank has been completed with 2.8 million accounts migrated in May. The extended migration slowed down the progress of Tesco Bank and has contributed to slightly lower revenues compared to last year, apart from the impact of a more competitive car insurance market.
TSCO.L is currently adding around 2 percent at 308.75 pence.
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by RTT Staff Writer
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