Tesco Plc reported the smallest quarterly sales decline in at least a year, another positive step for Chief Executive Officer Dave Lewis as he struggles to get Britons back shopping with the U.K. grocery leader.
Sales at U.K. stores open at least a year fell 1.3 percent on a basis that excludes fuel and value-added tax, the Cheshunt, England-based company said in a statement Friday. That compares with the previous quarter’s 1.7 percent decline and the 2 percent drop expected by analysts polled by Bloomberg.
Almost 10 months into his leadership, Lewis is battling to stem a sales decline that’s now into its fourth year. The CEO, who joined less than a month before the discovery of an accounting scandal, is closing dozens of unprofitable stores and has lowered prices on hundreds of branded goods in an effort to lure back customers from discounters Aldi and Lidl.
“It’s the U.K. that matters for Tesco’s long-term health and here Tesco delivered a handsome beat,” John Kershaw, an analyst at Exane BNP Paribas, said in a note. “There is a clear sense of progress.”
Deflating Horizon
Lewis said he expects deflation for the foreseeable future, speaking on a conference call. U.K. customer transactions rose 1.3 percent in the first quarter, slowing from 1.5 percent in the fourth quarter. Tesco is trimming its product ranges to simplify its offering, and lowered prices on more than 300 items in the period.
‘We are fixing the fundamentals of shopping to win back customers and relying less on short-term couponing,’’ Lewis said in the statement. “These first-quarter results represent another step in the right direction.”
Tesco shares have risen 15 percent this year on optimism that Lewis can begin a sales revival and start to pay down the company’s debt of 21.7 billion pounds.
The grocer, whose credit ratings were cut to junk earlier this year, has received first-round offers from private-equity firms including Carlyle Group LP and KKR & Co. for its South Korean business, people familiar with the matter said Thursday. It’s also considering selling Dunnhumby, the data-analytics business behind the grocer’s Clubcard loyalty program, which analysts have valued at as much as 2 billion pounds.
Bloomberg News, edited by ESM
