(MENAFN- Khaleej Times) UK same-store sales fell 1.5 per cent, excluding gasoline and value-added taxes, in the fiscal third quarter ended on November 23, Tesco said on Wednesday. The outcome matched the median estimate of 12 analysts in a Bloomberg News survey. Tesco said it's performing "in line with market expectations for the full year" in spite of "challenging conditions" in many markets.
The sales decline marked a deterioration from the second- quarter's stagnation, showing that the supermarket owner is still struggling to contend with the expansion of discounters Aldi and Lidl and of the upscale Waitrose chain. A one billion pound ($1.6 billion) investment in staff, revamped stores and price promotions has failed to restore growth, while revenue is also sinking in international markets such as Thailand and South Korea.
"There are few trading 'highlights' but numbers were as expected or even a touch better than feared," said John Kershaw, an analyst at Exane BNP Paribas. "Tesco needs to deliver on Christmas and the question of long-term margins remain, but it is a resilient statement from Tesco today." The shares rose as much as two per cent to 348.4 pence and traded at 348 pence at 8:16am in London, having fallen about six per cent in the past month on concern that sales may be worsening at home and beyond.
In Europe, sales at outlets open at least a year fell four per cent in the third quarter, Tesco said on Wednesday, as shoppers from Dublin to Bratislava shunned the stores. In Asia, same-store sales declined 5.1 per cent.
"Continuing pressures on UK household finances have made the grocery market more challenging for everyone since the summer," Chief Executive Officer Philip Clarke said in the statement. "The actions we have taken to position the business for the future - including the work currently underway to transform our general merchandise offer and our decision to significantly reduce the amount of new space we open - are also holding back our sales performance in the short-term."
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