Tesco, Britain's biggest retailer, reported its strongest quarterly sales performance for its home market in seven years on Friday as it navigated an increasingly inflationary trading environment.
Tesco, which in January agreed to buy wholesaler Booker for £3.7 billion, said UK like-for-like sales rose 2.3 per cent in the 13 weeks to May 27th, its fiscal first quarter – a sixth straight quarter of growth.
The outcome was ahead of analysts’ forecasts in a range of up 1.7 per cent to 2 per cent, and built on growth of 0.7 per cent in the previous quarter. Tesco said total group like-for-like sales rose 1 per cent.
The group said like-for-like sales in Ireland grew 0.2 per cent, reflecting the deflationary effect of its ongoing investment in core food lines. Irish volumes grew strongly at 3.8 per cent, including 5.3 per cent growth in fresh foods.
In a broker’s note, Goodbody estimated that Tesco accounted for approximately 4 per cent of Irish food company Greencore’s sales, and that the strong Tesco numbers provided a positive backdrop for Greencore 2017 earnings.
The Tesco figures represented the sixth consecutive quarter of positive sales momentum, and come after boss Dave Lewis hailed the grocery giant's first full year of sales growth in seven years in May.
Supplier partners
Mr Lewis said: “In tough market conditions we have stayed true to our commitment to helping customers, working closely with our supplier partners to keep prices low. Customers have responded by doing more of their shopping with us, and as a result we continue to grow volumes, particularly in fresh food.”
Tesco said sales were boosted by its fresh food offering, which saw “significant market outperformance”.
The group said it was working with suppliers to protect customers from inflationary pressures, and pledged shoppers would see further price reductions focused on fresh food and healthy products.
It comes after official figures earlier this week showed inflation surged to 2.9 per cent in May, which was higher than expected.
Mr Lewis added: “This is a good start to the year, with our sixth consecutive quarter of positive like-for-like sales growth across the group. We are confident in our plans to create long-term, sustainable value for our key stakeholders and to deliver on the ambitions we have set out.” – PA/Reuters
