Tesco '˜encouraged' by second quarter of sales growth

Tesco's recovery under chief executive Dave Lewis has continued to gain momentum, with the supermarket notching up its second consecutive quarter of UK sales growth.

Tesco has racked up its second quarter of UK sales growth. Picture: Steven Scott Taylor

Like-for-like sales in the first quarter of the year rose 0.3 per cent – although this was down from the 0.9 per cent growth seen in the previous period, it is the first time in more than five years that Tesco has reported two back-to-back quarters of UK sales growth.

Tesco also said it will sell its Harris + Hoole coffee chain to Caffe Nero in the latest of a series of disposals as the grocer focuses on its core supermarket business.

The sale comes less than a week after the supermarket giant said it was selling Midlothian-based Dobbies Garden Centres for £217 million to a group of private equity investors.

Tesco is also offloading its Giraffe restaurant chain to Harry Ramsden’s owner Ranjit Singh Boparan and selling its Turkish operation to Swiss retailer Migros.

Lewis said: “We have delivered a second quarter of positive like-for-like sales growth across all parts of the group in what remains a challenging market with sustained deflation.

“In both the UK and internationally, we are putting customers at the centre of everything we do and re-configuring our business to serve them a little better every day. Our new fresh food brands are performing very well, with over two-thirds of our customers having bought products from the new range.”

Across the group, like-for-like sales also grew for the second quarter in a row, coming in at 0.9 per cent.

Lewis added: “We are encouraged by the progress we are making. By growing volumes, transforming the way we work together with our suppliers, and further optimising our store operating model we are rebuilding profitability in a sustainable way.

“I am confident that the improvements we are making for customers are working and will create long-term value for our shareholders.”

At the group’s Edinburgh-based Tesco Bank division, sales were up 3.5 per cent in the quarter, as “strong” lending growth helped to offset a reduction in credit card interchange fee income.