Tesco’s recent international expansion may have led the UK’s largest retailer to take its “eye off the ball” domestically, an industry analyst said today (2 December) in the wake of the group’s third-quarter update.
The company’s trading update revealed that its UK like-for-like sales, excluding fuel, grew by just 2% during the 13 weeks to 22 November. This compares to like-for-like sales growth, excluding fuel, of 4% in the second quarter.
Internationally, the news was more positive, with a 28.1% jump in overseas revenues. However, Hargreaves Lansdown analyst Keith Bowman said the figure did not strip out sales at newly opened or acquired stores.
“There is some suspicion that Tesco management may have taken their eye off the ball in the UK,” Bowman told just-food.
Bowman said that Tesco has been highly focused on driving its international business – with its expansion into the US, growth in Europe and, particularly, growth in Asia.
Nevertheless, Tesco’s share price jumped 11.35% today, rising to 320.8 pence at 3.50pm (GMT).
Bowman said that this increase could in part be attributed to low expectations coming into the trading update. “Some people were looking for UK like-for-like growth of 1%,” he observed.
Additionally, Bowman said that a number of investors had been short selling Tesco shares in expectation of a poor set of results.