Clarke said customers liked Tescos changes to stores and product range

Clarke said customers liked Tesco's changes to stores and product range

Tesco CEO Philip Clarke said today (11 June) the retailer's recent moves to breathe fresh life into its UK arm was giving its domestic business "momentum".

The company's UK stores have been under scrutiny in recent months, not least since January when the retailer said its profits in the country in this financial year would not grow as previously forecast.

Tesco has invested in its stores, its product portfolio and its staff to boost sales but, this morning, it reported the fourth consecutive fall in underlying UK sales.

Nevertheless, Clarke said there were signs Tesco's initiatives were helping the business but he refused to be drawn on whether he thought the worst was behind its domestic arm.

"We can see momentum gathering but I'm not going to be precise," he said. "I've got no wish to pin myself down to a precise answer."

Tesco's moves to boost UK sales come amid a stagnant retail sector in the country and with consumer confidence remaining low. Clarke said Tesco had seen no change in consumer sentiment in the last three months. "Customers' real incomes aren't growing and they are having to be very careful with their budgets. Confidence isn't getting any worse but it isn't getting any better. The great hope would be that fuel prices are going to come down. Look at the Brent futures market, down 21%. That would be great for consumers."

In a bid to attract the UK's cautious - but promiscuous - consumers, Tesco has used money-off coupons more often. At the time of Tesco's profit warning in January, Clarke said the retailer had been slow to use vouchers and he said that had now been rectified, although he said there had been an "unhelpful" increase in the use of coupons across the industry.

"There has generally been an unhelpful step-up in the market of this type of promotion. We played our part in it as we planned to. If you stand by and do nothing, you leave the door open for others," he said. "It isn't the long-term solution. That's about getting the right blend of price, promotions, quality and service."

Tesco's recent problems in the UK prompted Clarke to get more involved in the retailer's domestic business, which led Richard Brasher, the CEO of the company's operations in the country, to leave the group in March.

Clarke said he was spending "about two days a week" on its UK business and, during the quarter, had only visited seven of the retailer's 13 markets. Usually, he would travel to all of the markets, he said.

However, when asked when Tesco will appoint a new chief executive for its UK business, Clarke said he would keep the domestic role "until further notice".