TESCO boss Philip Clarke insisted yesterday that his £1bn investment plan to turn the retailer around was “firmly on track” despite posting a slump in trading across all of its markets.
UK like-for-like sales fell 1.5 per cent in the third quarter to 23 November compared with flat sales in the second quarter and in line with analysts’ already downgraded forecasts.
In Asia trading deteriorated further, with like-for-like sales down 5.1 per cent while Europe’s underlying sales were dragged down by Ireland, where discounters have been pushed to match Tesco’s price promise scheme.
Tesco has been squeezed by discounters Aldi and Lidl at one end of the market and retailers such as Waitrose at the other. This has led several analysts to urge Tesco to cut its prices to reclaim market share, which has fallen under 30 per cent for the first time in 18 months, according to Kantar data.
“We think a price promise to match Morrisons, Asda and Sainsbury is not good enough,” HSBC analyst David McCarthy and long-standing critic said. “There are many price promises and price matching around the market place, but Tesco should be able to beat all its competition on price, even the hard discounters on comparable products.”
However, Clarke said the group was not looking for a “short term fix” and that it would not enter into a price war.
He added: “It will be clear over time who has made the necessary changes for the long term.”