Tesco's UK sales slip in snow but international growth ploughs on

Tesco yesterday reported a steady rise in third-quarter sales but warned that the current cold snap had hit trading.

• Tesco said it was confident of making up lost ground in the Christmas rush. Picture: PA

The record snowfalls have slowed sales in several areas, particularly Scotland, where many customers were unable to reach stores. But Britain's biggest retailer remains confident it can recover the lost business in the run-up to Christmas.

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Yesterday's trading update revealed a 1.5 per cent rise in third-quarter UK sales, beating the first half when like-for-like sales excluding petrol increased by 1.2 per cent.

Finance director Laurie Mc-Ilwee said the group's stores had generally held up well under the Arctic conditions.

The firm sent out its delivery lorries three hours earlier every day to give them more time to get to stores through the icy conditions and it used 150 specially adapted quad bikes to clear snow from supermarket car parks. The poor weather had forced some customers to walk to their local shops rather than drive to a larger supermarket although this benefited Tesco Express stores, McIlwee noted.

Aside from disruption caused by the big freeze, Tesco hailed the benefits of a slow and steady recovery in the UK economy.

"Like-for-like sales in the UK will get more positive," said Mc-Ilwee. "There's a good, steady, slow recovery going on in the UK. It's hard to call what the fourth quarter will be like, but it will be an improvement in like-for-like sales and we still feel there's good growth for us in the UK."

The group is gearing up for its biggest ever Christmas with Kate Middleton-style dresses, Xbox Kinect games and iPads already proving popular and helping early festive sales exceed its expectations. Group sales increased by 8.8 per cent in the three months to 27 November, led by 23.4 per cent growth in its supermarkets in Asia.

McIlwee said growth in the UK had picked up to 3 per cent by the end of the third quarter, despite a lower contribution from rising food prices compared with the second quarter. Tesco is said to take about one in every seven pounds spent on the British high street.

Freddie George, a retail analyst at Seymour Pierce, said the latest figures were a touch better than expectations and retained his "buy" rating on the shares.Tesco is capable of delivering double-digit growth for the foreseeable future and is well positioned to benefit from global economic growth and inflation, he said.

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Clive Black, an analyst at brokerage Shore Capital, said: "We are encouraged by sentiment and momentum."

Tesco, with more than 5,000 stores in 14 countries, is betting on expansion overseas and moves into financial services to drive growth, while seeking to maintain its dominant position in a mature British grocery market.

The group, whose international boss Phil Clarke succeeds long-standing chief executive Sir Terry Leahy in March, last month announced bold growth plans in China, South Korea and eastern Europe.