Tesco Plc, the U.K.'s largest supermarket chain, said domestic revenue barely grew in the first quarter as inflation eased and shoppers balked at the prospect of higher taxes.
Sales at UK stores open at least a year rose 0.1 per cent, excluding gasoline and value-added tax, in the 13 weeks ended May 30, the Cheshunt, England-based retailer said today.
That was less than the 2.7 per cent growth the company reported for the second half of the previous year and missed the 0.4 per cent median estimate of six analysts surveyed by Bloomberg News.
UK food price inflation slumped to 1.4 per cent in the three months through May 16, having reached 9 per ent in February 2009, according to Kantar Worldpanel.
That's eroded sales growth at Britain's supermarkets, which also are having to contend with weaker consumer spending. Prime Minister David Cameron said last week that the budget squeeze will come to "affect every single person in our country."
Tesco announced last week that Phil Clarke will replace Terry Leahy as chief executive officer in March. The retailer is extending non-food space and rewarding customers with double Clubcard loyalty points in an effort to boost growth, and held its 30.6 per cent share of the UK grocery market in the three months through May 16, according to Kantar data.
Total sales rose 8.2 per cent in the first quarter, or 6.9 per cent excluding gasoline, driven by store openings in Asia.
International same-store sales were little changed in the quarter, with some declines in Asia offset by gains in Europe.
Tesco fell 2.5 pence, or 0.7 per cent, to 391.65 pence in London trading yesterday. The stock has declined 8.5 per cent this year, compared with smaller competitor J Sainsbury Plc's 1.2 per cent drop.
Bloomberg