Tesco, the UK’s largest supermarket chain, has reported its worst performance in the UK for 20 years following another slump in sales .
The retailer said like-for-like sales, excluding VAT and petrol, declined 0.9 per cent in the three months to August 27, the third quarter in a row in which sales have fallen.
One of the factors behind the worse-than-expected performance was weakened demand for non-food, particularly electronics and entertainment items – two of Tesco’s largest product groups – although the company said food sales were showing signs of improvement.
While like-for-like sales fell, total group sales for the UK, including those from new store openings, petrol and VAT, rose by 7.1 per cent to £23.4bn over the three months.
Trading profits from its UK business grew 4.5 per cent to £1.3 billion, although Tesco said it expects them to flatten out in the second half of its financial year.
Outside of the UK, Tesco’s half-year underlying profits increased by 6.2 per cent to £1.9 billion, boosted by a strong performance in Europe and Asia. Sales rose 8.8 per cent to £35.5 billion.
Tesco chief executive Philip Clarke said growth in these markets have “supported further progress in the first half, despite the challenges of subdued demand in the UK, particularly in non-food categories”.
He added: “We are making substantial changes to our core UK business to sharpen execution and competitiveness for customers – investing in price and promotions, ranging, service and store environment – in food, general merchandise, clothing and electronics “.
