Tesco UK Sales Slow;Says Well-Positioned For Economic Recovery

15th Jun 2010 07:17

By Simon Zekaria Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Tesco PLC (TSCO.LN), the U.K.'s largest retailer by sales, Tuesday reported slowing U.K. sales growth in the first quarter but said it is well-positioned for the future. "We're in good shape and well-positioned to deliver further growth as the economic environment continues to improve," Chief Executive Terry Leahy said in a statement. Tesco posted a 1.1% year-on-year rise in U.K. sales from stores open at least a year, excluding fuel, for the 13 weeks to May 30. Adjusted for value added tax, the figure was 0.1%. This compares with a 4.3% rise excluding fuel and VAT last year. The group said it targets 3% U.K. same-store growth for the full year. Rival J Sainsbury PLC (SBRY.LN), the U.K.'s third-largest grocer, is also expected to report slowing sales Wednesday. Falling food inflation has hit the top line of U.K. supermarkets since the start of the year. Economists fear that consumer spending and confidence in 2010 will come under pressure from rising fuel prices, as well as forecasted tax hikes, public spending cuts and unemployment as the coalition government reins in borrowing. Wal-Mart Stores Inc.'s (WMT) Asda Group Ltd., the U.K.'s second-biggest retailer, last month said it expects trading to remain tough after its first-quarter net profit grew more than sales and beat internal targets, but same-store sales excluding fuel and VAT fell 0.3%. William Morrison Supermarkets PLC (MRW.LN) in May booked a 0.8% rise in first-quarter same-store sales excluding fuel and VAT and said it plans for flat inflation this year. Excluding fuel, Tesco's group sales rose 6.9% in the first quarter compared with a 12.6% rise in the same period last year. International sales at actual exchange rates excluding fuel rose 11.9%. In April, Tesco posted a forecast-beating 9.3% rise in full-year net profit to GBP2.34 billion. Philip Clarke, currently head of Europe, Asia and IT, will succeed Leahy as CEO next March. Tesco shares closed Monday at 392 pence, valuing the company at GBP31.27 billion. By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; [email protected] (END) Dow Jones Newswires June 15, 2010 02:17 ET (06:17 GMT)