Subscribe Login
DE4CC0DE-5FC3-4494-BCBF-4D50B00366B5
Retail

Tesco Reports Slowdown In UK Sales Growth In Q1

Tesco's sales growth has slowed sharply since the easing of the latest coronavirus lockdown as people start to visit pubs and restaurants again, Britain's biggest retailer said on Friday.

UK like-for-like sales, excluding fuel and VAT sales tax, rose 0.5% in the 13 weeks to 29 May, the group's fiscal first quarter - ahead of analysts' average forecast for a fall of 1.0%, but down from growth of 8.8% in the previous quarter.

Against the same quarter in 2019, before the pandemic impacted trading, UK like-for-like sales were up 9.3%.

"We continued to benefit from more people eating at home, although this started to slow down through the quarter as hospitality reopened," CEO Ken Murphy told reporters.

Tesco shares were down 2.6% at 09:32 GMT.


Change In Shopping Habits

Murphy said shopping habits were changing as pandemic restrictions ease, with customers visiting stores more often. Transactions were also up year-on-year as the lockdown trend of doing one big weekly shop began to reverse.

There were changes in what people were buying too.

General merchandise and clothing like-for-like sales were up 10.3% and 52.1% year-on-year respectively, as people got ready to socialise again.

Murphy said that while sales last year were focused on core grocery products such as pasta, this year customers were treating themselves to items such as Prosecco more.

Separately on Friday official data showed British retail sales fell unexpectedly last month as the relaxing of restrictions encouraged spending in restaurants rather than shops.

Tesco, which has a 27% share of Britain's grocery market, said first quarter online sales were up 22.2% year-on-year and up 81.6% on a two year basis.

Total group sales were £13.4 billion ($18.6 billion) up 1% like-for-like and year-on-year.

Guidance

Tesco kept its guidance for retail operating profit on a continuing operations basis for the 2021-22 fiscal year to recover to be similar to the 2019-20 outcome.

"While the market outlook remains uncertain, I'm pleased with the strong start we've made to the year," said Murphy.

Rivals Sainsbury's and Morrisons have also forecast a strong recovery in profits this year as the extra costs of the pandemic reduce.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our Terms & Conditions and Privacy Policy
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days