Tesco boss grapples with third quarter of falling sales

By Michael Stones contact

- Last updated on GMT

Related tags: Wal-mart, Retailing

Tesco's recovery plan is making 'painfully slow progress', said analyst Planet Retail
Tesco's recovery plan is making 'painfully slow progress', said analyst Planet Retail
Tesco chief executive Philip Clarke is putting a brave face on the troubled retailer’s latest results, which today (June 4) revealed a third consecutive quarter of falling sales.

Like-for-like sales – including VAT and excluding petrol – fell by 3.7% for the three months to May 24.

Philip Clarke, Tesco chief executive, said: “Our accelerated plans are making a real difference for customers and we are more competitive than we have been for many years.”

‘Subdued levels of spending’

But he added: “The first quarter has also seen a continuation of the challenging consumer trends in the UK, reflecting still subdued levels of spending in addition to the more structural changes taking place across the retail industry. We are determined to lead in this period of change, building long-term customer loyalty and positioning the business to win in the multi-channel era.”

Under severe pressure from discount stores – Aldi and Lidl – along with the other big three supermarkets, Sainsbury, Asda and Morrisons, Clarke highlighted the range of measures management was taking to combat the competition.

Since February, Tesco had cut prices on “the products that matter most”,​ cut home delivery charges and made its Grocery Click & Collect free. It had also launched its Clubcard Fuel Save nationwide in March and had continued its programme to revamp 650 neighbourhood stores this year including more than 100 Extra stores.

‘Intensifying pressure’

But the latest figures from Kantar released yesterday (June 3) revealed intensifying pressure on the nation’s top retailer.

Tesco’s sales fell by 3.1% over the 12 weeks to May 25, giving it a 29% share of the market, down from 30.5% a year ago.

Morrisons’ sales fell by 3.9% over the 12 weeks, with its market share falling to 10.9% compared with 11.6% previously.

Growth in the UK grocery market over the period dropped to 1.7%, its slowest pace for 11 years.

David Gray, retail analyst at Planet Retail, warned Tesco was falling behind both at home and abroad. “This morning’s results show retailing giant Tesco is losing momentum in both the UK and Asia,” ​he said.

“In the face of widespread declines in like-for-like sales, more work is clearly needed to revitalise the business. Although a recovery plan is underway, in the UK at least, progress is slow – painfully so.”

Watch the video below for more on Gray​s verdict on Tesco​s performance.

Read Tesco’s full results statement here​.

Meanwhile, Morrisons has been slammed by the Groceries Code Adjudicator for breaching the Groceries Supply Code of Practice, after it overcharged suppliers.

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