Tesco bucks recession as overseas sales soar

But growth at UK stores is likely to be overtaken by that of its smaller rivals

The retail giant Tesco trumpeted the strength of its international business yesterday and robust UK first-quarter figures, but the grocer's domestic sales continue to lag substantially behind its big three rivals.

The UK's biggest supermarket chain posted a 12.6 per cent rise in group sales, excluding petrol, as international sales rose 20.1 per cent at actual exchange rates for the 13 weeks to 30 May.

Lucy Neville-Rolfe, Tesco's corporate and legal affairs director, said: "Obviously, it has been a very difficult period in the economies that we operate and we have had very good growth, which demonstrates how useful our broad strategy is. Asia went into recession the latest and China is already beginning to show signs of recovery."

Tesco – which operates in 14 countries, including the US, Poland and the Czech Republic – said sales grew by 43.8 per cent in Asia, helped by favourable exchange rates with the weak pound and an "excellent performance" in South Korea.

In the UK, Tesco posted like-for-like sales, excluding petrol and VAT, up by 4.3 per cent, marginally down on the 4.4 per cent delivered in the first six weeks of its financial year.

While analysts at Shore Capital said this was Tesco's strongest UK underlying sales since the first quarter of 2007, its rival Sainsbury's is expected to post first-quarter underlying sales of 6.4 per cent today and Morrisons delivered an 8.2 per cent uplift, excluding fuel and VAT, for the 13 weeks to 3 May. For the three months ended March, Asda posted first-quarter like-for-like sales of 8.4 per cent, excluding petrol, the timing of Easter and the effect of a leap day in 2008.

Andrew Kasoulis, at Credit Suisse, said: "Although Tesco still lags its main peers in terms of headline like-for-like sales, Q1 sales are further evidence that the absolute performance remains very robust." Credit Suisse expects a "gradual convergence" in underlying sales among the big four grocers over the rest of the year. Last September, Tesco started introducing hundreds of discount brand products to fight back against the discounters Aldi and Lidl.

Tesco also relaunched its ClubCard with £150m on 11 May in a move that lets customers exchange vouchers for double value rewards tokens in store and online on a wide variety of products. Ms Neville-Rolfe said it had already hit its target of more than one million customers doubling up their vouchers. "ClubCard has [particularly] helped with clothing and wine," she said.

Overall, Tesco said that its UK non-food business had "resumed modest like-for-like growth", citing an improved performance on electricals, homewares, horticulture and toys. However, some City analysts said the return to form of its non-food implied its underlying food sales had slowed. Jonathan Pritchard, at Oriel Securities, said: "We continue to believe that Tesco's UK marketing lacks verve at the moment and have never been convinced by the discounter ranges."

Total UK sales, excluding petrol, jumped 9.3 per cent, boosted by revenues from Tesco Personal Finance unit.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Life and Style
tech
Arts and Entertainment
Rocky road: Dwayne Johnson and Carla Gugino play an estranged husband and wife in 'San Andreas'
filmReview: In the face of all-round devastation, even Dwayne 'The Rock' Johnson appears a little puny
News
i100
Arts and Entertainment
Bright lights, big city: Melrose Avenue in Los Angeles by dusk
books
Sport
Harry Kane makes Paul Scholes' Premier League team of the season
footballPaul Scholes on the best players, managers and goals of the season - and the biggest disappointments
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor