Tesco quarterly sales grow for the first time in three years

Sales at stores open over a year rose almost 1 per cent in the 13 weeks to February 27

General manager Radzuan Ma'asan said they didn't call the police because it was 'a genuine case of extreme poverty' (AFP)

Tesco has reported its first quarterly sales growth in three years, with sales at stores open over a year rising 0.9 per cent in the 13 weeks to February 27.

Tesco is still the biggest supermarket in the UK but continues to battle the rise of discounters Aldi and Lidl in the so-called supermarket war. It warned that its ongoing price cuts in this “challenging, deflationary and uncertain market” would put pressure on its profits this year.

Tesco made an operating profit before one-off items of £944 million, up from £940 million in 2014 to 2015.

Dave Lewis, chief executive, said that the results showed that the supermarket was making progress rebuilding its reputation after an accounting scandal on 2014.

“We have regained competitiveness in the UK with significantly better service, a simpler range, record levels of availability and lower and more stable prices," Mr Lewis said. "More customers are buying more things more often at Tesco."

Tesco's recovery has been fuelled by Lewis's efforts to streamline contracts with suppliers and close 60 unprofitable stores. The supermarket has also reduced prices on thousands of product and introduced 2,000 new lines.

Analysts said there was still some way to go to return Tesco to its former glories.

"More work is clearly needed before investors can hope for a return to anywhere near the previous levels of stock price, but this morning's report shows that the current strategy is beginning to bear fruit and the continued attempts by Mr. Lewis to streamline the business and dispose of unwanted segments indicate that the firm won't be resting on it's laurels as they strive to return to former glories," said David Cheetham of CFD and FX broker XTB.com.