Tesco sales growth slows in subdued market

Tesco has seen UK sales growth slow in its first quarter, pointing to weak consumer confidence and volatile weather.

Tesco said it outperformed a 'subdued' overall grocery market in the first quarter. Picture: Michael Gillen

The supermarket giant reported UK like-for-like sales growth of 0.4 per cent to £9 billion for the 13 weeks to 25 May.

In a trading update the group said it outperformed a "subdued" overall grocery market, but the result marks a sharp slowdown from the 1.7 per cent growth in the previous three months.

Total UK sales were also under pressure, down 0.4 per cent as it was hit by its decision to close non-food arm Tesco Direct last July - a move which impacted sales growth by 0.8 per cent.

Across the UK and Ireland, comparable sales lifted 0.8 per cent, down from 1.9 per cent in the previous three months.

Chief executive Dave Lewis said alongside weaker consumer sentiment, there had been "challenges" in the quarter around weather and tough comparisons from a year earlier, when trade was boosted by events such as the royal wedding.

He added: "There's some weakness in consumer sentiment in the UK. Clearly part of that is down to the political situation. The other element is the weather."

Volatile weather in the UK in recent months has impacted sales of seasonal products, such as clothing, according to the group.

But UK online grocery sales proved resilient, up 7 per cent year-on-year. Total group like-for-like sales edged 0.2 per cent higher.

Tesco Bank saw a 1.9 per cent drop in revenues to £270 million.

On its recent decision to put its mortgage business up for sale, impacting 23,000 customers who collect Tesco Clubcard points through the home loans, Tesco said the process was still ongoing.

It added it was too early to comment on plans to offset any potential loss of Clubcard points to the borrowers.