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Tesco UK Sales Beat Estimates As Grocer Holds Line On Prices

Published on Jun 16 2017 8:01 AM in Retail tagged: Featured Post / UK / Tesco / Booker

Tesco UK Sales Beat Estimates As Grocer Holds Line On Prices

Tesco Plc posted its strongest U.K. sales growth in seven years as the supermarket leader resisted raising prices as much as rivals in the face of Brexit-fueled food inflation.

Domestic same-store sales rose 2.3% in the 13 weeks ended May 27, the Welwyn Garden City, England-based grocer said in a statement Friday. That beat analyst estimates for an increase of 1.9%.

Working With Suppliers

The company resisted rising inflation across the U.K. economy by “working closely with our supplier partners to keep prices low," Chief Executive Officer Dave Lewis said in the statement.

The sales provide an early signal that the market leader’s decision to hold prices lower than rivals is luring cautious British consumers who face stagnant wages. Investor concerns over Tesco’s prospects have been building amid a resurgence in growth at discounters Aldi and Lidl and opposition to its proposed acquisition of wholesaler Booker Group Plc.

Food Volume Growth

"In the UK, we are entering our third year of positive food volume growth," said Lewis. "Fresh food volumes grew by 1.6% in the quarter, underpinned by further improvements across our customer offer. Total volume growth remained positive and similar to the fourth quarter as we continue to be more selective in the way we drive volume.

"This included a further reduction in short-term marketing activities in General Merchandise and continuing to reduce promotions in our household ranges, favouring stable, consistently low prices and larger, better value pack sizes."

Group sales were up 1.0% in the period; its sixth consecutive period of sales growth. International sales were down 3.0%, following the company's decision to stop selling bulk products in Thailand.

"This reflects a decision to simplify the business around our core retail offer, ensuring we focus on sustainable, profitable sales growth," Lewis added.

News by Bloomberg, edited by ESM. Additional reporting by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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