Tesco Suffers Slowdown In Growth Of Non-Food Business

Tesco has revealed it may be finally starting to feel the effects of the uncertain economic environment after reporting a slowdown in sales of its non-food business over the past three months.
The supermarket giant said shoppers were starting to cut back on expensive goods, particularly in big-ticket items such as furniture, as the tougher economic climate continues to force customers to tighten their spending.
Tesco yesterday revealed that UK like-for-like sales excluding petrol rose 3.5 per cent in the 13 weeks to May 24, failing to match analysts’ expectations of a 4 per cent increase over the quarter.
Tesco chief executive, Sir Terry Leahy, said the retailer made a “solid” start to the financial year despite economy worries, but added that it was clear that shoppers were cautious and that household budgets were being stretched.
Lucy Neville-Rolfe, Tesco’s corporate and legal affairs director, said: “People are a little bit more interested in value – they have become more canny.”
She added that sales of furniture had been hit by consumer cutbacks due to the deteriorating fortunes of the UK housing market .

Andrew Higginson, Tesco’s finance and strategy director, said that like-for-like growth of non-food products, which make up between 20 per cent and 25 per cent of Tesco sales, was less than food and drink “for the first time in a long time”.
Tesco said that sales in its growing international business were up 26.6 per cent over the first quarter, with the strongest growth achieved in Central Europe .

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