Tesco’s UK sales growth slows in latest quarter

FILE PHOTO: A Tesco supermarket is seen in west London
FILE PHOTO: A Tesco supermarket is seen, in west London on September 30, 2008. . REUTERS/Toby Melville/File Photo

June 13, 2019

LONDON (Reuters) – Tesco, Britain’s biggest retailer, said underlying sales growth slowed in its latest quarter, partly reflecting a tough comparative number in the same period last year.

The group said on Thursday it had outperformed a subdued UK market.

Tesco said UK like-for-like sales rose 0.4% in the 13 weeks to May 25. That was a 14th straight quarter of growth and compared to analysts’ forecasts in a range of flat to up 1%, and growth of 1.7% in the previous quarter.

“In the UK, whilst overall grocery market growth was subdued, we outperformed in both sales and volume terms…as we made further investments in range, price and loyalty,” it said.

The slowdown partly reflects a tough comparison with the same quarter last year, when Britain enjoyed hot weather and major events including a royal wedding.

In Tesco’s second quarter, the year-on-year comparison for the sector will not ease, given hot weather and sporting events last year, including the soccer World Cup, which boosted demand.

Prior to Thursday’s update, analysts were on average forecasting operating profit before exceptional items of 2.48 billion pounds for Tesco’s 2019-20 year, up from 2.21 billion pounds in 2018-19.

Shares in Tesco, up 20% so far this year, closed Wednesday at 227.4 pence, valuing the business at 22.3 billion pounds.

(Reporting by James Davey, Editing by Paul Sandle)

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