Tesco posts marginal rise in Q3 FY'14 sales

Highlights:

-Group sales growth of +0.6%

- UK sales growth of +0.9%

- Like-for-like sales decreased by (1.5)%, driven by a weaker grocery market

- Further progress towards Building a Better Tesco in the UK, including finest re-launch, and 108 more stores upgraded as part of our continuing Refresh programme

- Multichannel focus delivering record online grocery orders and positive LFL in Express

- International conditions remain challenging, particularly in Thailand and Ireland; our businesses in Poland and Turkey are showing better trends

Philip Clarke – Chief Executive

“Continuing pressures on UK household finances have made the grocery market more challenging for everyone since the summer and our third quarter performance reflects this.  The actions we have taken to position the business for the future – including the work currently underway to transform our general merchandise offer and our decision to significantly reduce the amount of new space we open – are also holding back our sales performance in the short-term.

Customers are continuing to respond positively to the changes we are making to the UK business to differentiate our offer and position Tesco as a multichannel leader.  These include the re-launch of finest, over 100 more store refreshes in the quarter and further investment into our fast-growing online grocery service.

Overseas, the near-term trading environment also remains tough, most notably in Thailand, but we have been able to drive a better performance in Poland and Turkey following the actions taken 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.”

Group sales

Group sales for the thirteen weeks ending 23 November 2013 increased by 0.6% at actual exchange rates and by 0.2% at constant rates, excluding petrol.  Including petrol, Group sales decreased by (0.8)% at actual exchange rates and by (1.2)% at constant rates.

UK performance

Total sales in the UK, including VAT and excluding petrol, increased by 0.9%.  Like-for-like sales, excluding both VAT and petrol, decreased by (1.5)% for the quarter.  The change in performance from Q2 to Q3 is broadly in-line with the weaker growth seen 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; the average spending power of a typical UK household is around 10% below its 2007 peak, in real terms.

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Tesco