Second quarter of growth for Tesco

By Jo Gilbert

Published: 23 June, 2016

Like-for-like sales are up at FTSE 100 giant Tesco, where sales grew by 0.9% for the 13 weeks to 28 May 2016.

In its most recent sales figures, Tesco posted positive like-for-like sales growth in all regions.

Like-for-like sales growth in the combined UK & ROI business was 0.3%, representing a second quarter of growth.

In the UK, the megastore's figures were helped by the March launch of seven new exclusive fresh-food brands.

Tesco has been streamlining its business strategy in recent months, having announced proposed sales of satellite businesses Giraffe and Kipa, Tesco's business in Turkey, on June 10.

"It's clear the new Tesco boss means business and he has been bold in his decisions. Tesco seem to have finally identified what keeps its customers happy and we've waved goodbye to 24 hour opening in many stores and fringe businesses like Dobbies and Giraffe as a result. The series of brave moves are paying off and the focus is rightly on lowering prices and introducing more choice," said Hannah Maundrell, editor in chief at money.co.uk.

Tesco, which has struggled significantly in recent years, has seen two thirds of customers buying products from its new ranges, with a total deflationary impact on sales of around (0.7)%.

Dave Lewis, Tesco Plc's chief executive, 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. 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."

Despite positive results, Maundrell added that Tesco's image is suffering due to its failure to sign up to the NFU fruit and veg pledge, which aims to help to reduce costs and wastage.

"It's disappointing Tesco has yet to sign the NFU fruit and veg pledge - they ought to lead by example and be the first of the biggest chains to do so. Tesco's image has suffered over the past few years and this could take them one step closer to getting shoppers to view the brand more ethically. If Aldi and Lidl can give farmers a fair deal and keep prices low for customers, surely Tesco can too."

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