TESCO boss Philip Clarke will have to convince investors this week that the grocery giant’s turnaround plans remain on track as he unveils an expected easing in UK sales.
Britain’s biggest supermarket group is already feeling the heat after recently reporting its first annual profits fall in nearly 20 years, hit by slowing sales growth and a raft of hefty writedowns.
While it saw modest like-for-like growth in its final quarter, sales at its core UK stores business are expected to have suffered a relapse as it comes up against a highly promotional market and resurgent performance from Sainsbury’s.
Recent industry figures showed Tesco’s market share slipping to 30.2 per cent in the 12 weeks to 12 May from 30.8 per cent a year earlier, while smaller rival Sainsbury’s enjoyed a rise from 16.5 per cent to 16.8 per cent.
Philip Dorgan, retail expert at Panmure Gordon, is forecasting like-for-like sales to have slipped by about 1 per cent in the group’s first quarter. He said it was “clear that Tesco has not been one of the recent winners”, although he added that the market should not read too much into one quarter’s lacklustre trading.
The focus is increasingly settling on online capability and less on sales growth, he noted.
Shore Capital analysts said the timing of Easter would have made for a volatile quarter and believe a robust March will have been offset by more subdued trading in April and May.