Tesco PLC (TSCO.LN) said Monday weak consumer confidence continued to weigh on trading, although its outlook remained unchanged for the year as the supermarket giant reported a fall in first-quarter same-store U.K. sales, just months after pledging one billion pounds ($1.55 billion) to revamp its ailing domestic operation.
"Tesco has performed robustly in the first quarter despite subdued consumer confidence in all our markets. Our customers are seeing the evidence of the changes we're making and they're telling us they like what they see," said Chief Executive Philip Clarke.
The retailer posted a 2.2% increase in total sales excluding fuel for the 13 weeks ending May 26. However, same-store sales--measured from outlets open more than a year--excluding VAT and fuel at Tesco's U.K. business were down 1.5%, in line with analyst expectations. The U.K. accounts for around two-thirds of Tesco's total revenue.
Although falling outside the first quarter, Tesco said it recorded its best week of the year in the run-up to the Queen's Diamond Jubilee on June 5, with sales of more than GBP1 billion.
In April, Mr. Clarke outlined a GBP1 billion plan to revive Tesco's slipping operation in its home market, where lackluster performance due to years of under-investment prompted a first profit warning in decades this January.
The company said a "substantial amount of work" had already started on the plan, including the recruitment of 4,300 new staff.
While Tesco is still far and away the U.K.'s biggest supermarket retailer with nearly a third of market share, it has leaked customers to rivals in recent years, a result, analysts say, of a period of aggressive international expansion that has seen the company take its eyes off the ball in its domestic market.
Latest data from Kantar, which monitors grocery purchasing habits, showed the trend continuing with Tesco's share of the market slipping to 30.8% in the 12 weeks to May 13 from 31.1% a year earlier.
The grocer's problems have been compounded by the dire U.K. retail environment, where consumers have come under increasing pressure as the U.K. economy has nosedived back into recession and miserable weather has kept shoppers off the high street in the first half of the year.
Nonetheless, a recent spell of good weather saw U.K. retail sales rise 1.3% in May, providing a ray of hope for the otherwise beleaguered retail sector.
Write to Peter Evans at peter.evans@dowjones.com
Source: www.4-traders.com
Tesco's UK sales fall as recovery plan struggles - msnbc.com
LONDON (Reuters) - Tesco
The supermarket group, with over 6,000 stores in 14 countries, said consumer confidence was subdued across all of its markets, with total sales up 2.2 percent including petrol in the 13 weeks to May 26, its fiscal first quarter.
Once one of the most consistent British companies in terms of earnings growth, Tesco stunned investors in January with its first profit warning in over 20 years, saying it needed to invest heavily to stem a steady decline in UK market share.
Many European retailers have been struggling as shoppers' disposable incomes are squeezed by higher prices, muted wages growth and government austerity measures.
Tesco, which accounts for about one in every 10 pounds spent in British shops and makes over 70 percent of its trading profit there, has suffered more than rivals like Sainsbury
The group said first-quarter sales at British stores open over a year, excluding fuel and VAT sales tax, fell 1.5 percent, in line with analysts' expectations.
That was marginally better than a 1.6 percent decline in the fourth quarter of its previous financial year, despite a tough comparative period when sales were boosted by a royal wedding.
"Our performance in the UK has been steady during a challenging quarter for the industry as a whole," said the firm.
"The industry remained very competitive through the quarter, with a significant amount of couponing activity."
Tesco added that it saw its biggest ever week outside of a Christmas period in the run-up to the four-day Queen's Diamond Jubilee holiday weekend, with over 1 billion pounds in sales. That will be included in second-quarter results.
"At this early stage of the year we are performing in line with market expectations for the group. The outlook for the year as a whole remains unchanged," it added.
In April Chief Executive Phil Clarke, a Tesco career lifer who as a youth stacked shelves in his local store, slashed expansion plans for the retailer's main British chain and said he would spend over 1 billion pounds on improving stores and online shopping in a bid to reverse the decline in market share.
He said the UK business needed more staff, smarter stores, lower prices and better products after becoming too focused on cutting costs and boosting profit margins. But he did not give a timetable for the plan to deliver better sales.
Tesco shares have lagged the STOXX Europe 600 retail index by 27 percent this year. They closed at 302.8 pence on Friday, valuing the group at 25 billion pounds ($39 billion).
(Writing by Mark Potter, Editing by Rhys Jones, Greg Mahlich)
(c) Copyright Thomson Reuters 2012. Check for restrictions at: http://about.reuters.com/fulllegal.asp
Source: www.msnbc.msn.com
Tesco upbeat despite new sales dip - Independent
UNDER-pressure grocer Tesco posted another UK sales decline today but said its performance has been robust as it battles to revive its fortunes.
The UK's biggest retailer, which operates 2,800 stores, said like-for-like sales fell 1.5pc in the 13 weeks to May 26, slightly better than the 1.6pc decline in the previous quarter.
But the group said it gained share from its rivals in a declining grocery market, helped by the addition of 4,300 extra staff and the overhaul of 100 stores.
And it said it had enjoyed its best ever week outside of Christmas amid the Diamond Jubilee celebrations, with more than £1 billion of sales, but this was not included in today's figures.
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Chief executive Philip Clarke said: "Our customers are seeing the evidence of the changes we're making and they're telling us they like what they see."
Tesco kept its profits outlook for the year ahead unchanged, reassuring investors after the chain's first profits warning in 20 years in January.
Shares opened nearly 2pc higher following the update.
Clive Black, a leading retail analyst at Shore Capital, said: "We see this as a steady statement suggesting stabilisation is coming through in the UK."
Mr Clarke launched his turnaround plan this year after admitting Tesco needed to sharpen up its pricing and customer service and that stores had become jaded and tired.
It has already given 145,000 staff specialist training, improved the offers through its Clubcard scheme and relaunched its Value range as Everyday Value with more colourful packaging.
Mr Clarke added: "We are rapidly implementing our six-point UK plan and I'm particularly proud of the relaunch of our Everyday Value range and the fact we have now put extra staff into 700 of our stores - in 500 of them within the last three weeks alone."
He said the group's sales overseas proved resilient, despite battling slowing economic growth in China and the eurozone debt crisis.
- Peter Cripps, Press Association City Staff
Source: www.independent.ie
Tesco maintains guidance after in-line quarter - Life Style Extra
In the 13 weeks ending May 26th, UK sales including value added tax (VAT) and petrol grew by 2.1% and by 2.0% excluding petrol. LFL sales, excluding both VAT and petrol, reduced by 1.5% in the quarter. Tesco said the UK performance was in line with expectations.
Broker Jefferies had predicted a 1.3% decline in LFL (excluding fuel) for the UK stores, while Nomura had forecast a 1.7% decline.
Looking at the worldwide picture, group sales (including petrol) rose by 2.2%, or 3.8% at constant exchange rates, and by 2.2% excluding petrol on a LFL basis, or by 3.9% at constant exchange rates.
Broker Jefferies predicted group sales growth of 2.6%, or nearly 4% excluding foreign exchange effects.
In Asia, total sales grew by 9.1% at constant rates and 9.0% at actual exchange rates, with positive like-for-like sales growth and a good contribution from new store openings.
In Europe, total sales excluding petrol grew by 6.0% at constant exchange rates, with further weakening of the European currencies against sterling affecting growth at actual rates. Like-for-like sales increased by 0.4%, helped by improved performances in Poland, Slovakia and the Republic of Ireland, which delivered its first full quarter of positive like-for-like sales growth since 2010.
In the US, Tesco's Fresh & Easy chain saw LFL sales excluding petrol rise 3.6%.
"Internationally, like-for-like sales growth proved resilient, despite slowing economic growth in China and the emerging impact of recently introduced shopping hours legislation in South Korea. Against the backdrop of continuing uncertainty in the Eurozone, it is pleasing to see that our businesses have largely sustained their performance," said Philip Clarke, Tesco's Chief Executive Officer.
The group said that at this early stage of the financial year it is performing in line with market expectations, and the outlook for the year as a whole remains unchanged.
JH
Source: www.lse.co.uk
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