Tesco sees further LFL sales dip
Tesco’s like-for-like (LFL) sales have slipped by 1.5%, third-quarter results for the biggest British retailer have shown, with analysts suggesting the discounters are taking market share from the leader.
According to Tesco, the decrease in the 13 weeks to 23 November was caused by a “weaker” grocery market, leading chief executive Philip Clarke to explain that a continued pressure on UK household finances had made the grocery market more challenging.
“The actions we have taken to position the business for the future – including the work currently under way to transform our general merchandise offer and our decision to significantly reduce the amount of new space we open – are also holding back our sales performance in the short-term,” he added.
Despite a dramatic slip in LFL sales, the chain saw group sales rise by 0.6% and overall UK sales grow by 0.9%. And Clarke explained that customers were continuing to respond positively to the changes the company was making to its UK business in a bid to make it a multi-channel leader. “These include the relaunch of Finest, over 100 more store refreshes in the quarter and further investment into our fast-growing online grocery service.”
Clarke also explained that he was confident the company’s strategic priorities were the right way forward. They included strengthening UK business, establishing multi-channel leadership and ensuring capital discipline. He also said it was Tesco’s aim to build a better company for UK customers, “despite a challenging backdrop”.
Meanwhile, analysts Clive Black and Darren Shirley, from Shore Capital, said: “While we do not hide our disappointment that Tesco cannot yet engineer a better trading performance than recorded in Q3, we believe that its strategy, valuation, yield and the promise of the benefit of economic recovery in the UK and Europe still make for a ‘buy’ recommendation.”
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