Business World

Friday 23 August 2019

Tesco clawing its way back to growth in key UK market

Shares in Tesco rose 2.7pc on Tuesday
Shares in Tesco rose 2.7pc on Tuesday

James Davey

Tesco has recorded its first UK sales rise since January 2014, suggesting attempts by the retail giant's new boss to restore an image dented by a price war with discounters and an accounting scandal may be bearing fruit.

Chief executive officer Dave Lewis has cut prices on fresh produce and branded goods, as well as improving customer service and product availability, in a bid to win back the customers that have deserted it in droves for cheaper rivals Aldi and Lidl.

Shares in Tesco rose 2.7pc on Tuesday after data from Kantar Worldpanel, an industry market researcher, said its sales nudged up 0.3pc over the 12 weeks to February 1 when compared against the year-ago period.

That small rise nonetheless considerably outperformed Asda, Sainsbury's and Morrisons, where sales fell 1.7pc, 1pc and 0.4pc respectively.

"Tesco is bouncing back from a tough year, with Dave Lewis's efforts to overhaul the supermarket attracting an additional 236,000 shoppers into its stores in the last 12 weeks," said Fraser McKevitt, Kantar's head of retail and consumer insight. In addition to changes on the shop floor, Lewis also announced last month that he would slash internal costs and sell assets to mend the company's finances and fight back from years of market share losses and debt-ratings downgrades.

He still has a way to go regarding Tesco's market share, which Kantar said fell 0.2pc points to 29pc as discounters Aldi and Lidl continued to gain ground, with sales growth of 21.2pc and 14.2pc respectively.

However, the positive sales news follows a better-than-expected Christmas for Tesco, which said in January it had seen volume growth over that period for the first time in five years.

Analysts at Barclays concluded the back-to-back figures suggested "the longer-term trends (for Tesco) are clearly more encouraging than they have been for some time".

Overall spending in Britain's grocery market grew at its fastest rate since June 2014, up 1.1pc over the 12 weeks, while like-for-like prices fell by 1.2pc.

Shares in Morrison rose 6pc after its sales performance hit its best level since 2013.

Irish Independent

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