UK: Tesco LFL sales decline continues

By Katy Askew | 4 December 2013

Tesco fails to turn LFL positive in UK, overseas

Tesco fails to turn LFL positive in UK, overseas

Tesco's sales came under increasing pressure in its third quarter, when the UK retailer again booked like-for-like declines at its businesses in the UK, Asia and Europe.

The UK's largest retailer said group sales grew 0.6% in the period to 23 November. However, the company saw sustained weakness in its comparable sales across all of its markets.

In the group's closely-watched UK business like-for-like sales fell 1.5%, which came on the back of a 0.4% like-for-like drop in the first half of the year.

Tesco blamed the drop on weak consumer sentiment. "Continuing pressures on UK household finances have made the grocery market more challenging for everyone since the summer and our third quarter performance reflects this," CEO Philip Clarke said.

Total UK sales were up 0.9% and the group emphasised it is making "further progress" on its UK turnaround plan, which has included the relaunch of its finest range, store refurbishments and a multichannel focus.

The company also faced difficulties overseas, where it experienced a "tough" near-term trading environment. In Asia, sales were up 1.1%, boosted by currency exchange, but like-for-like sales fell 5.1% on the year. In Europe, sales declined by 1% at actual exchange rates and by 2.9% excluding currency fluctuations. Like-for-like sales fell 4%.

Click here for just-food's analysis of the challenges facing Tesco.

Click here for a round-up of reaction from City retail analysts on the update.

Show the press release

Third Quarter Interim Management Statement

Tesco PLC's Third Quarter Interim Management Statement was announced today at 7.00am.

Highlights
Group sales growth of +0.6%
UK sales growth of +0.9%
Like-for-like sales decreased by (1.5)%, driven by a weaker grocery market

Further progress towards Building a Better Tesco in the UK, including finest* re-launch, and 108 more stores upgraded as part of our continuing Refresh programme
Multichannel focus delivering record online grocery orders and positive LFL in Express

International conditions remain challenging, particularly in Thailand and Ireland;  our businesses in Poland and Turkey are showing better trends

Philip Clarke - Chief Executive
"Continuing pressures on UK household finances have made the grocery market more challenging for everyone since the summer and our third quarter performance reflects this.  The actions we have taken to position the business for the future - including the work currently underway to transform our general merchandise offer and our decision to significantly reduce the amount of new space we open - are also holding back our sales performance in the short-term.
 
Customers are continuing to respond positively to the changes we are making to the UK business to differentiate our offer and position Tesco as a multichannel leader.  These include the re-launch of finest*, over 100 more store refreshes in the quarter and further investment into our fast-growing online grocery service.
 
Overseas, the near-term trading environment also remains tough, most notably in Thailand, but we have been able to drive a better performance in Poland and Turkey following the actions taken in the first half.

We are confident that our strategic priorities - strengthening the UK business, establishing multichannel leadership and ensuring capital discipline - are the right ones and that they will drive long-term value and returns.

Original source: Tesco

Sectors: Emerging markets, Financials, Retail

Companies: Tesco

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Tesco may have stuck to its profit forecasts for its financial year but another quarter of falling sales - with LFLs down in every market - shows the scale of the task in front of CEO Philip Clarke.

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