Sales growth at Tesco weakens

Tesco unveiled its slowest quarterly sales growth in more than three years yesterday as its competitors raised their game.

The supermarket group reported a 4.5 per cent increase in UK like-for-like sales excluding petrol for the three months to 27 May. It was its weakest quarter since the second half of its financial year to February 2003 when its comparable performance was growth of 3.9 per cent.

Andy Higginson, the finance director, said it was a "good, solid start", adding: "We're very pleased. We said coming into the year that we would be up against a slightly weaker consumer and a slightly stronger competitor set and that's how it's proved."

Total group sales, including the 20 per cent it gets from outside the UK, rose 10.4 per cent, while total UK sales climbed 9 per cent. For many months, the group has warned it saw like-for-like sales growth softening to the 3 to 4 per cent range.

Deflation during the period eased slightly at 1.4 per cent, but Mr Higginson played down fears that the threat of inflation was looming. "The truth is the market is intensely competitive at the customer interface and these things are never quite as literal as they first look," he said.

Tesco said it had enjoyed a fillip in the past week from the World Cup, which is bad news for most retailers except those selling food and alcohol. Beer, barbecue and party-related products had sold well, Mr Higginson said. "We hope to make an opportunity of it, really. The World Cup has kicked off very well for us."

All things Caribbean have been selling well in its Scottish stores before today's England match against Trinidad and Tobago, with rum sales 15 per cent up on the previous week, the group said.