Tesco under pressure as sales decline in all main markets

Britain's biggest supermarket chain reports a fresh dip in sales in all key markets

Tesco's turnaround plans under scrutiny as sales decline 1.5% in third quarter (Getty Images)

Tesco's turnaround strategy has come under renewed scrutiny after Britain's largest supermarket reported a fresh dip in quarterly sales.

Like-for-like sales in the UK fell 1.5 per cent in the three months to November 23. Sales also fell across all international regions for the second quarter in a row.

However, chief executive Philip Clarke said full-year profits remained in line with expectations.

He also dismissed suggestions from analysts that margins should be cut to 5.2 per cent to improve sales.

Clarke said: “The margin doesn’t have to be 5.2 per cent — it might be 4.8 per cent, it might be 5.6 per cent.

But where it is at the moment is not holding us back. I will not trade long-term health for short-term help. There is no relief in a slowing market.”

Tesco announced a £1 billion investment into its UK stores, which had been suffering at the hands of rapid international expansion, leaving sites dreary and unappealing.

However, Clarke said the upgrades could take up to two years to complete, with 108 large stores out of 500 updated so far.

However, its non-food, or general merchandise division, continues to suffer. Electricals have performed particularly poorly, although sales of its own-brand Hudl tablets topped 300,000.

The rise of discounters Aldi and Lidl is also starting to be felt.

Clarke said: “The traditional Big Four [Tesco, Asda, Sainsbury’s, Morrisons] are feeling the pressure of the discounters but we will succeed because we will become truly multichannel.”

Shares fell 1.1p to 340.6p.