Tesco's Sales Growth Slows In First Quarter
Tesco reported a sharp slowdown in underlying sales growth in its first quarter, reflecting a tough comparison with the same quarter last year when consumers stocked up in the country's first COVID-19 lockdown.
The group said UK like-for-like sales, excluding fuel and VAT sales tax, rose 0.5% in the 13 weeks to 29 May - ahead of analysts' average forecast of a fall of 1.0%, but down from growth of 8.8% in the previous quarter.
Against the same quarter in 2019, before the pandemic impacted trading, UK like-for-like sales were up 9.3%.
Tesco, which has a 27% share of Britain's grocery market, said growth was driven by customers eating more meals at home than before the pandemic.
Online sales were up 22.2% year-on-year and up 81.6% on a two year basis.
The group flagged particularly strong contributions from general merchandise and clothing, with like-for-like sales up 10.3% and 52.1% year-on-year respectively.
Tesco kept its profit guidance for the 2021-22 fiscal year.
"While the market outlook remains uncertain, I'm pleased with the strong start we've made to the year and continue to be excited about the many opportunities we have to create value over the longer term," said Chief Executive Ken Murphy.
Tesco has said it expects full-year retail operating profit on a continuing operations basis to be similar to 2019-20.
Rivals Sainsbury's and Morrisons have also forecast a strong recovery in profits this year as the extra costs of the pandemic reduce.
Shares in Tesco closed on Thursday at 231 pence, valuing the business at £18 billion ($25 billion).