Tesco chief executive Philip Clarke signals more pain ahead as sales fall

Britain's biggest supermarket recorded a like-for-like sales fall of 3.7% in the first quarter

Tesco chief executive Philip Clarke has admitted there is more pain in store for Britain's biggest supermarket after it unveiled its third successive quarter of worsening sales decline.

Clarke described the 3.7 per cent decline in UK sales for the three months to May 24 as the worst quarterly fall in his 40-year career at the chain, but refused to say whether he has received the backing of shareholders.

The sales fall follows a drop in market share to a 10-year low, plunging at the fastest rate in 20 years. Shares are languishing at a decade low and today dropped 1.7 per cent to 292.5p.

“I haven’t seen a quarterly fall like this before, but I’ve never seen a change in the industry like this across the world,” Clarke told the London Evening Standard.

He added: “Nobody could put me under more pressure than myself. But this is my absolute passion and I know I’ve got a job to do.

“The business is exactly where we thought we would be because we are restructuring it. I’m not going anywhere and I’ve got more energy and drive than ever before.”

However, when asked what reaction shareholders have given him he refused to give any details, calling the discussions “confidential”. He added: “I talk to Richard [Broadbent, Tesco chairman] all the time. The board and I have regular and constructive decisions about what the business has to do.”

He declined to say exactly how long like-for-like sales would continue to fall but admitted it would be for at least the next two quarters.

Earlier this year the company launched price cuts on several essential product lines in the hope to compete with German discounters Aldi and Lidl as the company ditched its promise of maintaining its 5.2 per cent profit margin. That pledge by former finance boss Laurie McIlwee ultimately led to his resignation this year and a search for a replacement is ongoing.

Sales were worst hit in out-of-town sites as shoppers turned to online and convenience stores, but Clarke said he hopes to win back customers with updated stores, including a revamp for all London sites in the next 18 months.

Delivery charges for online orders have also been cut and a fuel save scheme has been launched. Management says both are proving successful with an increase in online orders and customers joining the Clubcard scheme.

However, analysts were sceptical that the turnaround strategy was working, pointing out that the quarterly comparison with a year ago was during the height of the horsemeat scandal, which affected Tesco harder than some of its rivals.