Tesco's sales fall despite revival plan | Reuters

Reuters – Tesco, the world’s third-biggest retailer, reported a drop in underlying first-quarter British sales on Monday, as its recovery plan following a shock profit warning in January takes time to gain traction.

The supermarket group, which accounts for about one in every 10 pounds spent in British shops and makes over 70 percent of its trading profit there, said UK consumers were being careful with their spending as disposable income continued to fall and economic worries persist.

“Confidence isn’t getting any worse but it isn’t getting any better. The great hope would be that fuel prices are going to come down,” Chief Executive Philip Clarke told reporters.

“A (car) tank of petrol is still 70 pounds ($110) now and it was 40 pounds two years ago, an amazing dent in household budgets.”

Tesco said sales at British stores open over a year, excluding fuel and VAT sales tax, fell 1.5 percent, in the 13 weeks to May 26, its fiscal first quarter, in line with analysts’ expectations.

That was marginally better than a 1.6 percent decline in the fourth quarter of its previous financial year, despite a tough comparative period when sales were boosted by a royal wedding.

Clarke said Tesco’s performance improved relative to the market, with total UK sales down 0.3 percent to 2.0 percent versus a decline in market growth of 1.3 percent, according to Kantar data.

He added that the firm saw its biggest ever week for sales outside a Christmas period in the run-up to the four-day Queen’s Diamond Jubilee holiday weekend at the beginning of June, with over 1 billion pounds in sales. That will be included in second-quarter results.

“Had it been in the first quarter it would have been substantially better for us in our reporting,” said Clarke, noting the grocer sold nearly 1 million packs of party and picnic food and nearly 2 million sausage rolls.

But he said the UK supermarket sector remained very competitive through the first quarter, with a significant amount of couponing activity.

via Tesco’s sales fall despite revival plan | Reuters.

Strange Random Supermarket Quote:

“A person buying ordinary products in a supermarket is in touch with his deepest emotions.” – John Kenneth Galbraith

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