Tesco has laid the blame for its latest drop in UK like-for-like sales on high petrol costs hitting consumer spending.

Consumers were filling up petrol tanks at the expense of grocery shopping, the retailer said, draining sales across the industry as a whole.

That came as the supermarket giant reported a 0.1% fall in like-for-like sales in the UK for the three months to 28 May.

The first-quarter figures represent an improvement on the 0.7% like-for-like dip Tesco suffered in the previous quarter. Tesco blamed that on a weak performance by its non-food business, with demand for electrical goods again particularly slow in the most recent period.

But the retailer insisted its UK growth remained ahead of the industry as a whole, hailing an “excellent performance” from its new stores. Tesco also highlighted growth in fresh prepared foods and meat, fish & poultry, with sales for its Finest range up by almost 10% on a like-for-like basis.

Sales across the group were up 6.7% excluding petrol, with Asia again a key driver of growth.

Tesco said it was "encouraged" by the momentum of its Fresh & Easy business in the US, which - despite recent criticism - reported double digit like-for-like sales growth of 11.1%, helped both by increased customer numbers and higher average spend.

Chief executive Philip Clarke said the performance marked “a good start to the new financial year” amid “subdued” consumer confidence.

“The overall performance of our businesses in Asia and Europe has again been pleasing, led by further strong growth in Thailand and across Central Europe,” Clarke said.

“Uncertainties remain but with early, encouraging signs of better performance emerging in both the UK and the US, I am confident this start will provide the platform for another year of growth.”

Read more
Trust is key to ‘new retailing’ says Tesco boss Clarke (8 June 2011)
Clarke: Tesco must create quality new brands (31 May 2011)
Clarke concedes ‘We must do better’ as Tesco falters in fourth quarter (19 April 2011)

Topics