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Tesco reports slower rate of decline

Article By: ,  Financial Analyst
June 26, 2015 1:36 PM

The UK's top supermarkets have faced stiff competition recently as discount retailers like Aldi and Lidl have been on the rise.

In its latest analysis, Tesco has reported a slower rate of decline than previously seen – positive news that the company attributes to its strategy to stem the flow of customers switching the discounters, reports the BBC.

While Tesco says its rate of decline is slowing, the supermarket still experienced a 1.3 per cent fall in sales for the three months the the end of May. During the same period ast year, UK sales dropped by four per cent. 

Commenting on the results, chief executive Dan Lewis explained some of the tactics being used to encourage customers back to the shops. "We are fixing the fundamentals of shopping to win back customers and relying less on short-term couponing," he explained.

Better than expected

Tesco's UK results were an improvement on analysts' forecasts which predicted a fall of 1.6 to 3 per cent. It's also an improvement on the 1.7 per cent fall reported in the fourth quarter of the last financial year.​

Taking the group's international businesses into consideration too, group sales dropped 1.3 per cent in the quarter compared to a 3.4 per cent fall a year ago.

Data from researcher Kantar Worldpanel has also shown that 180,000 more customers shopped at the supermarket in the 12 weeks to May 24th.

In April, Tesco reported its worst loss in history. This included a pre-tax loss of £6.4 billion – around £4.7 billion of those losses were the result of the fall in the property value of UK stores.

Tim Bush from pension advisers Pirc told the BBC that investors would be questioning the payoffs for Tesco's former chief executive Philip Clarke and finance director Laurie McIlwee. 

"Things have stopped getting worse by they haven't yet started getting better," Mr Bush explained.

In early trading, Tesco's shares rose 3.3 per cent. At 11:35 BST, they were up to 224.75.

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