The retailer reported like-for-like UK sales, excluding petrol and VAT, down by 1.5% in the 13 weeks to 26 May. The firm described the trading period as "a challenging quarter for the industry as a whole”.
Shore Capital's Clive Black and Darren Shirley noted that there was no profit warning, which “is an important foundation to the rebuilding of Tesco’s investment credentials”, they said.
Black and Shirley added that Tesco’s performance was “in-line with our expectations with a slightly better out-turn in its core international markets”.
Signs of stabilisation
They concluded: “We are encouraged that there are signs of stabilisation in the UK after sustained under performance whilst [the firm’s] international [business] is proving more robust than we expected.”
In a statement, Tesco’s ceo Philip Clarke, said: "Tesco has performed robustly in the first-quarter despite subdued consumer confidence in all our markets.”
In April Clarke announced a £1bn investment plan that he promised would "put the heart and soul back into Tesco”. The investment was designed to rejuvenate domestic profits which fell for the first time in over 20 years.
While it was too early to see the results of that investment, Clarke said Tesco was outperforming the market. He highlighted Kantar data which showed that market growth fell by 1.3%, from 3.7% in the fourth quarter of last year to 2.4% in the first quarter of this year. “Our total sales growth, over a very similar period, reduced by only 0.3%, from 2.3% to 2.0%,” he said.
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.
“Our customers are seeing the evidence of the changes we're making and they're telling us they like what they see.”
The firm had updated its own-label ranges, with improvements to 350 Tesco Standard products so far, he said. Those included quality upgrades to Indian, Italian, Mexican and Oriental ready meals and nearly 500 brand new products.
More than 100 stores had been “refreshed” since the beginning of the year and a total of 4,300 additional new staff recruited and trained. The new staff were deployed in Extra and Superstore departments covering fresh food and beers, wines and spirits.
Also more than 145,000 staff had received specialist training, relevant to their department.
While sales in the run up to the Diamond Jubilee were not included in the latest results, Tesco said it saw its “biggest ever week (outside of a Christmas period) in the run up to the Diamond Jubilee”. Sales during the period exceeded £1bn.
Meanwhile, former Tesco boss Sir Terry Leahy published a management handbook focusing on 10 key words. To read more, click here .