Tesco (TSCO) has announced first quarter UK like-for-like sales growth of 2.3% and a 1% rise in first quarter group like-for-like sales, its sixth consecutive quarter of organic sales growth.

Total sales at constant exchange rates were up 0.8% as the year-on-year impact of selling Dobbies, Giraffe and Harris & Hoole offset store openings across the group.

At actual exchange rates, sales grew by 3.6% in the 13 weeks to 27 May 2017 including a 2.9% positive foreign exchange translation effect.

Like-for-like sales in Tesco’s combined UK & ROI business grew by 2.2%, with the UK like-for-like sales growth of 2.3% driven by a 2.7% jump in like-for-like food sales in the country.

Tesco’s 2.3% UK like-for-like growth is its strongest quarterly performance of its turnaround after like-for-like sales rose 0.7% in the fourth quarter of its previous financial year and 1.8% in the third quarter.

During the quarter it reported a 1.3% growth in customer transactions – some ten million more than last year

Tesco said it was entering its third year of positive UK food volume growth, with fresh food volumes growing by 1.6% in the quarter.

Total volume growth remained positive and similar to the fourth quarter as it continues its strategy of further reduction in short-term marketing activities in general merchandise and reducing promotions in its household ranges.

Tesco stated: “We have worked hard with our supplier partners to protect customers from inflationary pressures and to keep prices as low as possible. Our price position relative to competitors has improved and our efforts to offset inflation have been recognised by our customers with a further improvement in our ‘Trust in Price’ Spotlight measure.”

As part of its plans to its cost base by £1.5bn it completed the closure of our Welham Green and Chesterfield depots in March and April respectively and also made further progress to simplify the business, including the sale of its optician business to Vision Express.

International like-for-like sales were down 3% in the quarter, predominantly due to a 2.7% impact from discontinuing unprofitable bulk selling of products - particularly tobacco and alcohol - in Thailand.

CEO Dave Lewis said: “In tough market conditions, we have stayed true to our commitment to helping customers - working closely with our supplier partners to keep prices low.

“Customers have responded by doing more of their shopping with us and as a result we continue to grow volumes, particularly in fresh food.

“This is a good start to the year, with our sixth consecutive quarter of positive like-for-like sales growth across the Group. We are confident in our plans to create long-term, sustainable value for our key stakeholders and to deliver on the ambitions we have set out.”

Tesco shares rose as high as 188p when the market opened, but have settled back to a current level of 180.6p - up 0.3% on yesterday’s close.

Morning update

Nestlé (NESN) announced last night it will “explore strategic options” for its US confectionery business, including a potential sale.

The review covers the US market only and is expected to be completed by the end of this year. 

Nestlé’s US confectionery business had sales of around CHF900m million in 2016 and primarily includes popular local chocolate brands such as Butterfinger, BabyRuth, 100Grand, SkinnyCow, Raisinets, Chunky, OhHenry! and SnoCaps, as well as international chocolate brand Crunch.

The strategic review does not cover Nestlé’s Toll House baking products, which gthe group called a strategic growth brand which the company will continue to develop in the US market.

Forecourt and service station operator Applegreen (APGN) has appointed Niall Dolan as its new chief financial officer effective 1 July 2017.

Dolan is currently Head of Corporate Finance & Treasury with Applegreen having joined the business in May 2015. Prior to joining Applegreen Mr Dolan was CFO of ISS Ireland for five years.

Bob Etchingham Applegreen CEO commented: “Niall has been a valuable member of our senior team since he joined us, prior to the 2015 IPO. He has gained wide and valuable experience in his career to date and has demonstrated an ability to contribute to the strategic direction of the business and work with colleagues at all levels. We wish him well in his new role”.

Dolan succeeds current CFO Paul Lynch who, as previously announced, steps down from his role as CFO and board director on 30 June.

Elsewhere, Conviviality(CVR) has appointed Investec Bank as its sole broker with immediate effect.

On the markets this morning, the FTSE 100 has opened up 0.3% to 7,439.4pts and the FTSE 250 has bounced back by 0.7% to 19,697.3pts.

Early risers include Nichols (NCLS), up 2.5% to 1,734.7p, PayPoint (PAY), up 2.1% to 986p, Hilton Food Group (HFG), up 2.1% to 760p, Coca Cola HBC (CCH), up 1.5% to 2,337p and B&M European Value Retail (BME), up 1.5% to 343.7p.

Early fallers include Majestic Wine (WINE), down another 1.2% to 344.9p, Applegreen (APGN), down 1.5% to 435p and C&C Group (CCR), down 1.6% to €3.29.

Yesterday in the City

A profits warning from sofa retailer DFS and weaker than expected retail sales data from the Office of National Statistics hammered the general retailers yesterday.

The ONS reported retail sales volumes fell by 1.2% in May, reprenting the sector’s worst month for four years.

The FTSE 100 reacted by edging down 0.7% to 7,419.4pts, but the more UK-focussed FTSE 250 was hammered – dropping 2.2% to 19,553.6pts.

Those retailers with most exposure to general merchandise were worst hit, but the grocers were caught up in the sell-off.

Marks & Spencer (MKS) plunged 4.7% to 351.8p, B&M European Retail (BME), 3.1% down to 338.8p, WH Smith (SMWH), fell 3% to 1,737p and Primark owner Associated British Foods (ABF), dropped 2% to 2,961p.

Tesco was the worst hit of the supermarkets, falling 3.2% to 178p, while Morrisons dropped 2% to 239.9p and Sainsbury’s fell 1.9% to 262.4p. Tesco-bound Booker (BOK) fell 3.1% to 192.4p and Ocado (OCDO), dropped 1.7% to 274.3p.

Majestic Wine (WINE) was hit by the double whammy of market worries over its outlook statement in its annual results yesterday and the general conditions in UK retail, with the shares plummeting 9.2% yesterday to 349.3p.

It was a tough day all round for those with UK consumer exposure. Other fallers included Hotel Chocolat (HOTC), which collapsed by 6.6% to 326p, Conviviality down 3.1% to 309p, Greggs (GRG) which fell 1.9% to 1,079p, Dairy Crest (DCG), down 2.8% to 619.5p and FeverTree (FEVR), down 2.8% to 1,611p.

The day’s few risers included Science In Sport (SIS), up 1.2% to 86.5p, AG Barr (BAG), up 0.7% to 644.5p and McColls (MCLS), up 0.6% to 204p.

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