Tesco sales down

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THE UK’s biggest supermarket Tesco reported falling sales for the fourth quarter in a row today despite its £500m price-cutting campaign.

In the UK, where it has 2,700 stores, Tesco recorded a 0.9 per cent decline in like-for-like sales excluding VAT and petrol in the 13 weeks to November 26, equal to the drop seen in the previous quarter.

Despite the decline, the grocer insisted the results of its Big Price Drop, which saw the cost of 3,000 everyday products slashed, were “promising” as food volumes rose by a whole percentage point, offsetting the deflationary impact of its price cuts.

Elsewhere, Tesco saw a significant slowdown in Asia, which has driven the overall group performance in previous months, where like-for-like sales grew 0.8 per cent, compared with 3.9 per cent in the second quarter, as the impact of flooding in Thailand and warm autumn temperatures in South Korea and China took their toll.

Kate Calvert, retail research analyst at Seymour Pierce stockbrokers, described the results as “uninspiring”.

She said Tesco’s use of the word promising to describe the early results of its Price Drop strategy was not “particularly encouraging language”.

Tesco covered its price cuts by slashing the number of multi-buy promotions and scrapping its double Clubcard points reward offer.

The offensive triggered an aggressive response as competitors responded with their own schemes, such as Sainsbury’s Brand Match campaign and Asda’s move to bring petrol prices down.

Tesco’s market share slipped to 30.5 per cent in the 12 weeks to November 27, from 30.7 per cent a year ago, researchers Kantar Worldpanel said this week, but customer numbers were still up.

Chief executive Philip Clarke said: “Times are tough for a number of our customers at home and in a number of our international markets.”

The grocer said it had seen an improvement in the decline in its like-for-like sales of non-food items, with strong performances in the home and electricals sectors offsetting a weaker show from CDs and home entertainment categories.