Tesco upbeat despite sales dip

The UK's biggest retailer has suffered another drop in sales but is winning business back from its rivals.

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Tesco suffers another drop in sales

Sales are down again at the UK's biggest retailer by 1.5% in the 13 weeks to the end of May. However, Tesco says its performance has been robust as it tries to turn round its fortunes. In the previous quarter the retailer saw sales decline 1.6%.

  • Tesco says it managed to gain market share from its rivals
  • Recorded its best ever week outside of Christmas during the Diamond Jubilee celebrations
  • Those £1 billion worth of sales are not included in today's figures

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Tesco losing market share

A trading update for the first quarter of Tesco's financial year is expected to reveal that the recovery plan has yet to gain momentum, and the group is still losing market share amid the price war and a buoyant performance from discounters Iceland, Aldi and Lidl.

Andrew Kasoulis, an analyst at Credit Suisse, expects like-for-like sales excluding fuel and VAT to decline 1.5 per cent in the 13 weeks to May 26, in only a slight improvement on the 1.6 per cent fall in the previous quarter.

The sales performance comes at a time when food price inflation has been more than 4 per cent, indicating that underlying sales volumes at Tesco are significantly down. Tesco has been trying to turn around its performance through a raft of special offers, including money-off vouchers.

Tesco continues to lose out to rivals

Sign on a Tesco store Credit: PA

The rivalry between supermarket giants Tesco and Sainsbury's will be in focus this week when the pair issue trading updates.

Tesco is expected to suffer another bloody nose on Monday when it reveals it has continued to lose out to rivals despite heavy discounting and a £1 billion recovery plan.

Sainsbury's sign Credit: PA

The chain, which is the UK's biggest supermarket with 2,800 stores, is fighting to win back shoppers after dire trading led to its first profits warning in 20 years, while its shares recently hit three-year lows.

Chief executive Philip Clarke, who recently declined his bonus because of the poor performance, has launched a recovery plan that has seen the grocer focus on revamping stores, hiring more staff and sharpening pricing.

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