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December 2, 2008

UK: Tesco shares up despite hit to UK sales

Shares in Tesco climbed by over 6% this morning (2 December) despite the UK's largest grocer revealing that domestic sales growth during the last three months was half that reported in the previous quarter.

Shares in Tesco climbed by over 6% this morning (2 December) despite the UK’s largest grocer revealing that domestic sales growth during the last three months was half that reported in the previous quarter.


Tesco shares were up 6.77% to 307.5p at 09:21 GMT today in the wake of a third-quarter trading update that showed the group’s UK like-for-like sales, excluding fuel, grew by 2% during the 13 weeks to 22 November.


During Tesco’s second quarter, like-for-like sales excluding fuel were up 4%. Tesco’s moves to attract cash-strapped UK shoppers with more “discount” products helped lure in more shoppers but weighed on the retailer’s sales. Tesco said the “Discounter “ range already accounts for 5% of UK grocery sales three months after the range was launched.


Tesco’s group sales rose 11.7% thanks to “excellent” growth from its international operations. The retailer’s Asian businesses helped drive a 28.1% jump in international revenues. At constant exchange rates, Tesco’s international sales rose 14.6%.


Sales in Asia climbed 29.4%, while in Europe, sales rose 6% at constant exchange rates.


In the US, Tesco said its early Fresh & Easy stores had moved strongly into like-for-like growth and added the overall performance of the business was “pleasing”.


Chief executive Sir Terry Leahy insisted Tesco had made “solid progress” across the business during the quarter.


“We are pleased with our progress but we are also realistic – the current economic climate, and the strain this is putting on consumers everywhere, is something that all businesses are feeling, including ours,” he said.

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