Tesco has announced aggressive expansion plans for Malaysia after signing a deal with local joint venture partner Sime Darby. But the multiple also released a trading statement showing a slight slowdown in its global sales growth. The Malaysian deal follows 18 months of painstaking research into opportunities in the market. Under the deal, which gives Tesco a 70% and Sime Darby a 30% share in new company Tesco Malaysia JV, Tesco will invest £215m to build at least 15 hypermarkets across the country in the next five years. Four stores are scheduled to open next year, with the first opening mid year at Puchong, near capital Kuala Lumpur. Construction work has already begun. The hypermarkets will have a 50:50 split of food and non-food with a pricing structure to appeal to a broad cross section of consumers. Separately, Tesco was the fourth consecutive multiple to report a decline in sales growth against the previous quarter this week, the first clear sign that sales growth in the industry is beginning to tail off, said analysts. Group sales for the 14 weeks ending November 17 were up 12.2% against rises in the mid teens for the previous two quarters, although like-for-like sales growth remained strong at 6.4%, well ahead of competitors Safeway and Sainsbury. Analysts said quibbling over how much of Tesco's like- for-like increase was generated by store extensions and how much was from exactly the same space, an issue raised by Safeway last week, was not very productive. "Even if you factor in the extra square feet, the figures are pretty damn good however you look at them," said one City analyst. Analysts took issue with Tesco's claim that its latest round of price cuts was responsible for deflation of 1% and said falling petrol prices probably played a more significant role in the drop. Total UK sales were up 9.2% and volumes up 7.4%. International sales rose 34% with a 30% increase in overseas selling space planned for this year, putting Tesco on course to overtake its UK selling space with overseas space by the end of 2003. {{NEWS }}

Topics