Tesco today issued “solid results” for the first quarter of the financial year, with one analyst stating the leading supermarket chain was well placed to accelerate growth in the UK after the recession.
Chief executive Sir Terry Leahy said: “We have made a solid start to the year in the UK.
“Excluding petrol and VAT, like-for-like retail sales for the quarter increased by 4.3% (3.3% growth including VAT), which was similar to the rate of growth reported for the first six weeks with our preliminary results in April.
“Net new stores contributed 2.8% and Tesco Personal Finance a further 2.2%, bringing total growth excluding petrol to 9.3% (8.3% growth including VAT).
“Including petrol, which has seen substantial deflation in recent months, total UK sales including VAT grew by 5.5%.
“The early response of customers to the recent re-launch of our Clubcard scheme, which rewards loyal customers by enabling them to double the value of their money-off vouchers when they buy a wide range of products in-store or online, has been very encouraging – with more than a million doubling up their vouchers so far.
“Our non-food business has resumed modest like-for-like growth, with improved performance across most categories compared with the second half of 2008/9.
“Electricals, homewares, horticulture, stationery and toys saw good growth and the Tesco Direct spring and summer ranges have also sold strongly,” he said.
Total group sales for the 13 weeks to May 30 increased by 12.6%, excluding petrol. Growth was 9.7% including petrol.
Tesco’s international operations, particularly those in Asia, delivered “another strong start to the year”.
International sales increased by 20.1% at actual exchange rates (11.4% at constant rates).
This included a “resilient performance” in Europe – where, despite recessionary conditions in a number of markets, sales grew by 1.9%.
Growth in Asia was “encouraging” – at 43.8% – helped by exchange rates and continued “excellent” performance from the converted Homever stores in Korea.
In the US, customer numbers continue to grow strongly and sales grew by 174%.
“We have seen pleasing market share gains across our international network as we invest in lower prices for customers and push on with planned new store development,” said Leahy.
Caroline Gulliver, at analyst Execution Ltd, said: “Fears over the UK and Eastern Europe have proved unfounded and Tesco is setting itself up for higher growth post recession.
“Sir Terry Leahy also made some encouraging comments on the consumer recovering in the UK.”
She said Tesco in the UK seemed to be over the worst of the competitive threat.
Tesco’s first quarter like-for-like sales growth in the UK, she said, in line with forecasts, and no doubt significantly below what Sainsbury’s will report tomorrow.
“But in our view this is a good performance (better than the 3.7% in the fourth quarter) and illustrates that Tesco’s Discount brand launch and Clubcard initiatives are paying off in terms of winning back customers and regaining share of wallet”.
