Tesco warns sales still dropping

26th Jun 2015 07:02

Supermarket chain Tesco reported another slip in sales, but said the decline was slowing.The retailer said at actual rates sales for the 13 weeks to 30 May 2015 declined by 1%, excluding fuel, in a trading update on Friday.UK like-for-like sales dropped by 1.3%, but this is an improvement on the last quarter's drop of 1.7%.Tesco said in a statement deflation was driven both by Tesco price investments and weakening commodity markets.International like-for-like sales also improved, Tesco said, although Korea and Thailand like-for-like sales were down by just over 3% and 2% respectively.Chief executive Dave Lewis said the company is "fixing the fundamentals of shopping" to wean customers off short-term couponing."Whilst the market is still challenging and volatility is likely to remain a feature of short-term performance, these first quarter results represent another step in the right direction."Deutsche Bank reiterated its price target of 240p and held its rating on the stock at 'buy'.Analyst Niamh McSherry said the result was "surprisingly steady" and ahead of market expectations in its four largest markets, the UK, Ireland, South Korea and Thailand."While the caveat of a 'challenging market' and 'short-term volatility' remains, we find the first quarter sales performance re-assuringly steady, with no change in outlook compared to the full year results in April," McSherry said in a note.Galvan Research said the figures show there's light at the end of the tunnel, as the fall is the smallest quarterly drop in more than a year.Analyst Alex Joyner said sales volumes are the key metric, and this lifted by 1.4%.