Market-leading UK retailer Tesco today [Friday] said its first-quarter same-store sales in the UK were up 4.5%. While this corresponds to analysts’ forecasts, it confirms that sales growth has slowed since last year.

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Analysts see this as proof of their forecast that the overall grocery market is slowing down, rather than evidence that Tesco is in trouble. They expect to see same-store sales growth ease off to between 4% and 5% this year after a lively two years.


Barclays Private Clients analyst Henk Potts said Tesco had produced a strong set of sales, reported Dow Jones. He said the grocer is trying to insulate itself from price deflation in the UK and tough historical comparative figures by diversifying into new product areas and geographical regions. Potts said Tesco is still a strong growth story.


Numis analyst Mark Hughes said the figures contain no surprises and the slowdown is in line with the rest of the sector. He said food sales – stripping out non-food and petrol – are around 2.5%, which he said was “not massive”.


ABN Amro’s Mark Wasilewski said 4.5% same-store growth was OK, although he had been expecting 5%.

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Meanwhile, institutional investors in Tesco have been told to abstain in the voting for the re-election of  chief executive Terry Leahy at the company annual general meeting today [Friday].


According to the Financial Times, the National Association of Pension Funds, representing 1,000 pension funds with £650bn of assets, has advised its members to abstain from re-electing Leahy and three other executive directors, because they enjoy two-year rolling contracts, which are seen as a breach of best corporate governance practice.