Tesco sales growth slows

City A.M. Reporter
Sales growth at Tesco has slowed to just half that of the broader grocery market as rivals like Wal-Mart's Asda and J Sainsbury gain share, data showed.

Market research by Kantar WorldPanel showed grocery sales in Britian climbed 4.2 per cent year-on-year in the 12 weeks to January 22 compared with 4.8 per cent in the 12 weeks to 25 December.

With grocery price inflation at 5.7 per cent, that signals Britons are cutting back on the number of items they buy and switching to cheaper goods as their free cash is squeezed by rising prices, muted wages growth and austerity measures.

Sales growth at Tesco, which issued a shock profit warning on January 12, slowed to 2.1 percent from 3.3 per cent in the 12-weeks to December 25.

Growth at Wm Morrison Supermarkets, the fourth-biggest grocer, was also down sharply to 3.7 per cent from 5.1 per cent.

In contrast, Asda's purchase of Netto UK stores helped to lift its market share to a record 17.5 percent, while Sainsbury's grew market share to 16.7 per cent, its highest since March 2003.

Frozen food specialist Iceland Foods also saw its share reach a 10-year high of 2.1 per cent on the day second-round bids for a controlling stake in the business are due to be lodged.