Challenging times are reflected assupermarket rivals go head-to-head

Tesco’s half-year results tomorrow are expected to reflect a tougher period for the UK’s number one supermarket.

The chain’s first quarter was particularly poor, with UK sales almost grinding to a halt – at 1.1 per cent – as the grocer wrestled with plunging food inflation.

Analysts are expecting some sales improvement in the second-quarter, to around 1.3 per cent, according to Credit Suisse, while market forecasts for pre-tax profits show a rise to 1.6bn, compared with 1.42bn a year earlier.

The supermarket faces one of its biggest management upheavals, with chief executive Sir Terry Leahy stepping down after 14 years with the business in March. He will be replaced by international and IT director Philip Clarke.

Elsewhere, the company has appointed a new deputy chief executive for its US arm, a newly-created role of chief executive of UK business, and its first chief executive of Asia.

Sir Terry has led the supermarket’s overseas expansion and his successor has already said this will also be a major area of focus under his reign.

Meanwhile, analysts have predicted nearly three per cent like-for-like growth for Sainsbury’s in the second quarter, ahead of the company’s own expectations of two per cent and up on the one per cent growth it saw in the first quarter.

The City will be hoping for payback from the retailer’s investment in non-food sales and in store space expansion, as well as news on current trading following a re-launch of its upmarket range.

Marks & Spencer posts its latest trading update on Thursday, and the City will be looking for indications as to where new chief executive Marc Bolland plans to take the business.

Mr Bolland arrived in May as a chief executive with a formidable reputation, having led a turnaround of supermarket Morrisons during his tenure there. The market is hoping the Dutchman can weave some of his magic at M&S, which has struggled in the recession.