Tesco optimistic on Q1 sales growth
Tesco like-for-like sales grew 0.9% in the quarter
UK retail giant Tesco has booked an increase in group sales in the first quarter, and offered an optimistic outlook thanks to ongoing efforts to rebuild profitability.
In the three months ended 28 May, group like-for-like sales grew 0.9%, with positive like-for-like sales growth in all regions. In the UK, like-for-like sales were up 0.3%, while volumes grew 2.2% and transactions were up 1.7%.
International like-for-like sales increased 3%, with a positive result in both Asia and Europe for the fourth consecutive quarter. Sales growth of 3.6% at constant exchange rates included a strong performance from Tesco's Thailand business.
As part of the retailer's effort to streamline the customer experience across its mix of formats and channels, this month Tesco will complete the integration of customer websites for Tesco Direct and its F&F clothing division.
"We are encouraged by the progress we are making," said Dave Lewis, chief executive. "By growing volumes, transforming the way we work together with our suppliers, and further optimising our store operating model we are rebuilding profitability in a sustainable way. I am confident that the improvements we are making for customers are working and will create long-term value for our shareholders."
David Alexander, senior analyst at Verdict Retail, said he believes the green shoots of recovery are beginning to establish themselves at Tesco, as it ushers in its second consecutive quarter of positive like-for-like growth.
"Like rival Sainsbury's, Tesco was keen to emphasise that continued deflation has meant that the modest growth this quarter belies a more substantial increase in volumes and transactions. Unlike Sainsbury's though, Tesco can now lay claim to sustained momentum in its turnaround, with the former witnessing LFLs slip back into negative territory in its own first quarter."
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