Tesco value down 4 per cent on disappointing sales
15 Jan 2011
The world's third-largest largest retailer and the UK's largest, Tesco lost 4 per cent of its value on Thursday after posting disappointing sales in the UK over the six weeks to 8January.
According to the supermarket, UK like-for-like store sales were up by just 0.6 per cent over Christmas, hit by the poor performance of its non-food division. Some analysts said had it not been for VAT the figure the like-for-like sales would be negative. Shares of the UK's largest store group were down 18.15 to 405.55p.
Though, Tesco's outgoing chief executive Sir Terry Leahy, who took up the role in 1997 described the performance as 'solid', said the weather had a negative impact on the retailer's trading. He said the performance was hindered in the run up to the important Christmas trading period in the UK by the disruptive effects of the severe winter weather conditions.
Meanwhile, growth in UK like-for-like food sales of 1.7 per cent was pulled down by a 1.5 per cent fall in non-food sales. J Sainsbury, earlier this week, reported a rise in UK like-for-like sales excluding petrol, of 3.6 per cent over the 14 weeks to 8January.
According to Laurie McIlwee, finance director, analysts rightly had high expectations of Tesco as Tesco had been such a strong growth story over recent year and had never had to play catch-up unlike its smaller rivals.
However, the retailer's UK performance notwithstanding, group sales, including sales at Tesco's chains around the world - rose by 7.6 per cent. Total non-UK sales grew by 14.2 per cent.
