Tesco has had to survive not only the recession but also the loss of Irish checkout assistant Mary Byrne to the X Factor… yet they’ve come out smiling on the other side.
The UK retail giant has announced it is detecting signs of ‘a steady consumer recovery’ as it revealed a 1.5% rise in third quarter UK sales.
The supermarket chain unveiled that sales of its upmarket ‘Finest’ range were still selling very well and had achieved double-digit growth in the past two years. It also pointed to a rise in non-food sales compared with the second quarter, while Tesco Direct sales were up 30%.
Tesco admitted the recent snow had impacted trading, particularly in Scotland where many customers were not able to travel to stores, but it hoped to recover the lost sales in the weeks before Christmas.
‘Like-for-like sales in the UK will get more positive,’ said Tesco Finance Director Laurie McIlwee. ‘There’s a good, steady, slow recovery going on in the UK. It’s hard to call what the fourth quarter will be like, but it will be an improvement in like-for-like sales and we still feel there’s good growth for us in the UK.’
Mr McIlwee said its improved UK performance had been achieved despite a reduction in food inflation over the quarter, with prices rising by around 0.7%.
Tesco said it was detecting signs of ‘a steady consumer recovery’ as it revealed a 1.5% rise in third quarter UK sales.
It has seen an acceleration in growth since the second quarter, when the like-for-like sales increase – excluding petrol – was 1.2%.
The supermarket giant said sales of its upmarket Finest range were still doing well and had achieved double-digit growth in the past two years. It also pointed to a rise in non-food sales compared with the second quarter, while Tesco Direct sales were up 30%.
The retailer’s shares were up 7.45p to 427.45p this morning.
Tesco admitted the recent snow had impacted trading, particularly in Scotland where many customers were not able to travel to stores, but it hoped to recover the lost sales in the weeks before Christmas.
Finance director Laurie McIlwee said Tesco sent out its delivery lorries three hours earlier every day to give them more time to get to stores through the icy conditions and it used 150 specially adapted quad bikes to clear snow from supermarket car parks.
The snow had forced some customers to walk to their local shops rather than drive to a supermarket although this also benefited Tesco Express stores, he added.
Tesco hailed the benefits of a slow and steady recovery in the UK economy.
‘Like-for-like sales in the UK will get more positive,’ said Mr McIlwee. ‘There’s a good, steady, slow recovery going on in the UK. It’s hard to call what the fourth quarter will be like, but it will be an improvement in like-for-like sales and we still feel there’s good growth for us in the UK.’
Mr McIlwee said its improved UK performance had been achieved despite a reduction in food inflation over the quarter, with prices rising by around 0.7%.
Tesco is gearing up for its biggest ever Christmas with Kate Middleton-style dresses, Xbox Kinect games and iPads already proving popular and helping early festive sales exceed its expectations.
Group sales increased by 8.8% in the third quarter to November 27, led by 23.4% growth in supermarkets in Asia. Tesco added like-for-like sales growth in the US was 9.8%, and it enjoyed a particularly successful Thanksgiving.
Graham Spooner, investment adviser at stockbroker The Share Centre, said: ‘Tesco’s global presence is fast becoming the big attraction for investors, especially as it is looking to expand even further afield by introducing cash and carry type stores to India.
‘Investors should also note the group remains committed to its US start-up business and expects it to be profitable by 2013. It is also keen to expand its retail banking operations. If they are successful, long-term shareholders should benefit further.’
