Tesco performance ahead of expectations
Tesco today emerged as a winner in the latest UK price war in the supermarket sector after reporting a 7.8% rise in like-for-like sales.
Group sales for the 12 weeks ending May 22 increased by 12.3%.
The UK’s biggest grocery chain said its core food business in the UK had captured market share from rival retailers in the wake of the merger of Morrisons and Safeway earlier this year.
Sky-high petrol prices also boosted sales growth during the 12 weeks to May 22, which was faster than the previous quarter and ahead of market expectations of around 6%.
Tesco does not publish separate trading statements for Ireland, but spokesman John Church said Ireland "in common with our other internationsl operations", is performing well and had contributed to the overall positive report.
Tesco Ireland was formed in 1997 following the acquisition of Power Supermarkets Ltd (Quinnsworth/Crazy Prices).
The company is the largest food retailer in Ireland operating 79 stores nationwide, and employing 10,200 people.
Tesco has invested more than £100m (€152m) in slashing prices to meet the challenge of rivals such as Morrisons and Asda which have unveiled special offers on a host of goods this year.
In a trading update today, Tesco noted there had also been price reductions in its non-food business.
Total sales in the UK were 11.1% ahead of a year ago, reflecting same-store growth and an expansion of selling space at existing outlets and new openings.
Chief executive Terry Leahy said: “I am particularly pleased that our core UK food business has continued to grow market share and to perform very strongly in the first quarter.”
Tesco said its non-food business had gone from "strength to strength", with two and a half times more items sold during a recent clothing sale than a year ago.
Fashion ranges were in demand, with a green dress similar to one worn by pop diva Kyle Minogue proving a particularly strong seller.
International sales were up 24% in the first quarter, but the strength of the pound meant the rise was a more modest 18% after stripping out the impact of currency swings.
All countries where Tesco has outlets contributed to this growth despite tough trading conditions.
The trading statement was issued to coincide with the group’s annual meeting in London today.
Executives including boss Terry Leahy are expected to come under fire from shareholders over their pay and bonus deals for 2003, when Tesco reported underlying profits of £1.7bn (€2.6bn).
Investor lobby group Pensions Investment Research Consultants (Pirc) has vowed to oppose the group’s remuneration report and option scheme.
It disagrees with a structure that allows departing directors to claim average cash bonuses earned in the previous two years – equivalent to up to one year’s salary.
In addition, Pirc said: “We do not believe the new incentive schemes put to shareholder approval meet best practice.”
Pirc is also opposed to current deputy chairman David Reid stepping up to become non-executive chairman in succession to John Gardiner.
It believes the move breaches a new code on corporate governance and says the chairman should be independent on appointment.
