Tesco’s haemorrhaging sales slow

By Nicholas Robinson

- Last updated on GMT

Tesco's sales dropped by 1.7% for the same period last year
Tesco's sales dropped by 1.7% for the same period last year

Related tags Sainsbury's Asda Tesco

Tesco boss Dave Lewis has slowed the retailer’s haemorrhaging sales, as his plans to regain customers from the discounters Aldi and Lidl achieved a dip of just 1.3%, its first quarter results show.

Sales for the 13 weeks ended May 30 fell by 1.3%, compared with a 3.4% drop for the same period last year, which Lewis attributed to his “fixing of the fundamentals of shopping” ​to win customers back.

The beleaguered retailer, which had beaten analysts’ forecasts of a sales fall of up to 3% for the period, had also improved on its 1.7% sales drop in the final quarter of last year.

“We are fixing the fundamentals of shopping and relying less on short-term couponing,” ​Lewis said.

“Customers are experiencing better sales, better availability and lower, more stable prices and are buying more things more often at Tesco.”

Management restructure

Improvements in sales and the in-store customer experience had occurred during Tesco’s management and office restructuring activities, he pointed out.

Like-for-like sales volumes were up by 1.4% in the UK and transactions had increased by 1.3%, Lewis added.

The retailer had also pulled in more than 180,000 extra customers for the period, according to data from analyst Kantar Worldpanel.

​[This] testifies the focus, skill and commitment of colleagues across the business,” ​said Lewis, who also highlighted an improved performance in Tesco’s international business.

Significant price-cutting on branded products in January this year had attracted more customers, while a roll-out of similar reductions on more than 300 additional products improved pricing against Tesco’s key competitors, he said.

“Our range reviews are progressing well, enabling us to simplify our offer, further reduce prices and increase availability,” ​Tesco said in its results.

‘Reducing lines by 20%’

“We have now completed initial range reviews in 15 categories, reducing the number of lines by up to 20%, whilst still retaining market-leading level of choice.”

Leading analysts believed action taken by the likes of Tesco, which made its worst ever pre-tax loss of £6.4bn last year​, were too little and too late.

Julian Wild, head of the food team at Rollits solicitors, went as far as saying the big four retailers – Tesco, Asda, Sainsbury and Morrison – had lost their market share to the discounters​ Aldi and Lidl for good.

“The major retailers have finally woken up, changed their management – years too late – and are now responding,” ​Wild told FoodManufacture.co.uk.

“But they are too big and too slow to react effectively and with too much floor space,” ​he added.

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