Tesco reports rising first quarter sales

Tesco has published a trading update
Tesco has published a trading update
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Tesco has reported rising first quarter sales as the supermarket said it was reaping the rewards of offering customers lower prices in the face of rising inflation.

UK like-for-like sales in the first quarter of the year rose 2.3 per cent, driven by a 2.7 per cent comparable sales growth in food.

The figures represent the sixth consecutive quarter of positive sales momentum and come after boss Dave Lewis hailed the grocery giant’s first full year of sales growth in seven years in May.

Mr Lewis said: “In tough market conditions, we have stayed true to our commitment to helping customers, working closely with our supplier partners to keep prices low.

“Customers have responded by doing more of their shopping with us and as a result we continue to grow volumes, particularly in fresh food.”

Tesco said sales were boosted by its fresh food offering, which saw “significant market outperformance”.

The group said it is working with suppliers to protect customers from inflationary pressures and pledged shoppers will see further price reductions, focused on fresh food and healthy products.

It comes after official figures earlier this week showed inflation surged to 2.9 per cent in May, which was higher than expected.

Mr Lewis added: “This is a good start to the year, with our sixth consecutive quarter of positive like-for-like sales growth across the group.

“We are confident in our plans to create long-term, sustainable value for our key stakeholders and to deliver on the ambitions we have set out.”

Like-for-like sales across the group rose 1 per cent, although Tesco was held back by a 3 per cent fall in comparable sales at its international division.

In the UK, fresh food volumes grew by 1.6 per cent in the quarter after the grocer reduced prices on a range of fruit and vegetables and more than 200 other healthy products.

John Ibbotson, an analyst from Retail Vision, said: “Tesco has delivered a corker in its core UK market. Food, and fresh food in particular, is firing on all cylinders and that’s a huge shot across the bows for its competitors, in particular Morrisons.

“With inflation rising sharply, Tesco has used its immense buying power to keep prices lower for its customers. Against this inflationary backdrop, the numbers are all the more remarkable.

“But the toxic combination of rising inflation and low wage growth remains a major threat.

“As inflation continues to erode people’s spending power, more and more of Tesco’s customers could be driven back to the discounters, Aldi and Lidl.

“What’s particularly encouraging is that Dave Lewis is acutely aware of this and knows that nothing can be taken for granted.

“He is sticking religiously to the basics of grocery, which is delivering a robust food proposition, keeping keeping prices low and putting a massive focus on customer service.

“Tesco’s looming merger with Booker could prove a distraction, especially as the Competition and Markets Authority starts its review, but if it goes ahead the deal will further cement Tesco’s comeback.”

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