LONDON: Britain’s biggest retailer, Tesco, is expected to slip back to an underlying sales decline when it publishes first-quarter trading figures tomorrow, raising doubts about a costly recovery plan for its home market.
Analysts are forecasting sales to have fallen 0.5 to one percent at British stores open more than a year, excluding fuel and VAT sales tax, for the 13 weeks to May 25, according to a Reuters poll.
That would be a reversal of the rise of 0.5 percent in the fourth quarter of the previous financial year, which was Tesco’s best quarterly outcome in three years.
Tesco, whose profit fell for the first time in two decades in the year that ended February 23, has spent £1bn ($1.5bn) on a fightback plan for Britain, where it makes over 60 percent of revenue and profit.
Its turnaround plan has focused on more staff, refurbished stores, revamped food ranges and price initiatives — all aimed at reversing years of underinvestment and halting a loss of share to “big four” rivals as well as discounters like Aldi and upmarket player Waitrose.
A squeeze on shoppers’ incomes, poor weather, Europe’s horsemeat scandal and a greater focus than rivals on non-food items are likely reasons for the expected drop in first-quarter sales at Tesco, the world’s third-biggest retailer after Wal-Mart and Carrefour, analysts said.
Tesco’s shares, up 21 percent over the last year, were the biggest fallers on the blue-chip FTSE 100 index, down 2.5 percent by 1230 GMT yesterday.
Britain’s supermarkets, despite their focus on essential goods, have been hurt by the economic downturn and are battling for market share.
Reuters
