Tesco UK sales fall as consumers stay under pressure

4th Dec 2013 07:03

Woes at Tesco continued on Wednesday as the British supermarket group blamed a tough grocery market for a decline in UK third quarter sales.Tesco said like-for-like sales in the period had fallen 1.5% due to a grocery market that had become more difficult since the summer due to pressure on consumer finances. The company's total UK sales lifted 0.9%.Group sales for the thirteen weeks ending November 23rd increased 0.6% at actual exchange rates and 0.2% at constant rates, excluding petrol. Including petrol, group sales decreased 0.8% at actual exchange rates and 1.2% at constant rates.Chief Executive Philip Clarke claimed the change in performance from the second to the third quarters broadly matched the weaker growth in the UK grocery market as a whole."Consumers are still managing the effects of an unprecedented period of declining real incomes and a higher cost of living," he said."The average spending power of a typical UK household is around 10% below its 2007 peak, in real terms."Clarke said measures to boost the business, such as general merchandise improvements and its decision to significantly reduce new space open, had also held back short-term sales.He explained people were responding positively to the re-launch of the group's premium Finest food range, over 100 more store refits in the quarter and further investment in fast-growing online groceries.Clarke said overseas near-term sales had been tough, most notably in Thailand, but its performance in Poland and Turkey had improved following action in the first half."We are confident that our strategic priorities - strengthening the UK business, establishing multichannel leadership and ensuring capital discipline - are the right ones and that they will drive long-term value and returns," Clarke added.Sales at Tesco Bank increased by 0.9%, with an increase in interest income from strong lending growth offset by reduced fee income across its insurance business. It remains on track to complete a full range of banking products with the launch of current accounts in the first half next year.Clarke concluded: "Despite the challenging conditions in many of our markets, we are performing in line with market expectations for the full year."PW