Tesco sales dip for fourth quarter

 

The UK's biggest supermarket Tesco reported falling sales for the fourth quarter in a row today despite its £500 million price-cutting campaign.

In the UK, where it has 2,700 stores, Tesco recorded a 0.9% decline in like-for-like sales excluding VAT and petrol in the 13 weeks to November 26, equal to the drop seen in the previous quarter.

Despite the decline, the grocer insisted the results of its Big Price Drop, which saw the cost of 3,000 everyday products slashed, were "promising" as food volumes rose by a whole percentage point, offsetting the deflationary impact of its price cuts.

Elsewhere, Tesco saw a significant slowdown in Asia, which has driven the overall group performance in previous months, where like-for-like sales grew 0.8%, compared with 3.9% in the second quarter, as the impact of flooding in Thailand and warm autumn temperatures in South Korea and China took their toll.

Shares were down 1% after the trading update, which Kate Calvert, retail research analyst at Seymour Pierce stockbrokers, called "uninspiring".

She said Tesco's use of the word promising to describe the early results of its Price Drop strategy was not "particularly encouraging language".

Tesco covered its price cuts by slashing the number of multi-buy promotions and scrapping its double Clubcard points reward offer.

The offensive triggered an aggressive response as competitors responded with their own schemes, such as Sainsbury's Brand Match campaign and Asda's move to bring petrol prices down.

Tesco's market share slipped to 30.5% in the 12 weeks to November 27, from 30.7% a year ago, researchers Kantar Worldpanel said this week, but customer numbers were still up.

Chief executive Philip Clarke said: "Times are tough for a number of our customers at home and in a number of our international markets."

The grocer said it had seen an improvement in the decline in its like-for-like sales of non-food items, with strong performances in the home and electricals sectors offsetting a weaker show from CDs and home entertainment categories.

Tesco said it had seen strong performances in new stores, as total sales including VAT and petrol grew by 6.7% in the period, while online sales increased by 10%.

The group's Asian powerhouse market faltered in the quarter due to a number of temporary factors hitting sales.

In Thailand, like-for-like sales slowed from 7.5% to 1.4% as devastating floods forced the closure of 165 stores across the country.

Meanwhile, the warmest autumn in northern Asia for 75 years affected seasonal merchandise sales, particularly in South Korea, where same-store sales slowed from 0.9% growth to 0.3% and in China where like-for-like sales grew 3.4%, compared with 6.1%.

Its Europe division strengthened, with like-for-like sales up 0.9%, compared with 0.1% in the previous quarter, driven by Poland and Slovakia.

The loss-making US business, Fresh & Easy, which aims to break even by the end of the 2012/13 financial year saw like-for-like sales growth of 11.9% as customer numbers increased and average spend was higher.

PA

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
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

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum