Tesco is a better pick than Sainsbury’s

THOSE looking for proof the UK is going to bump along the bottom for a while before making a convincing exit from recession need only look at this week’s supermarket sales figures. Now the comparatives are beginning to get tougher, things are looking decidedly lacklustre.

Analysts at RBS reckon J Sainsbury will report flat UK like-for-like sales excluding VAT. Arch rival Tesco will also report a soft start to the year, with RBS analysts pencilling in a 0.3 per cent increase in like-for-like sales excluding VAT.

But thanks to Tesco’s increasingly global focus, international sales growth – expected to be 14 per cent in the first quarter – will help cushion the blow.

When it comes to Tesco, short-term UK like-for-like sales trends are increasingly unimportant. Its international expansion is continuing apace, with 11m sq ft of new space set to open this year. Of that, 8.5m sq ft will be opened abroad, with 33 per cent more space in Turkey, 27 per cent in Malaysia, 46 per cent in Japan, 28 per cent in China and 35 per cent in the US.

The challenge for Tesco is expanding its distribution network to keep up with this frenetic growth. J Sainsbury has been more cautious, barely expanding in North England or Scotland let alone globally. It has done well to target AB professionals and cash in on the fresh food craze, but this isn’t enough when Tesco is the competition.