Tesco first quarter sales drop 5.5 per cent in aftermath of horsemeat scandal

Supermarket Tesco has seen European sales drop 5.5 per cent on a like-for-like basis in the first quarter of 2013 (release).

The firm said that performance in each food category was stronger in the first quarter than the last two months of 2012, with the exception of frozen foods and chilled convenience meals.

Earlier this year Tesco received negative publicity over the contamination of some products with horsemeat. Tesco said that since January it has now completed nearly 1,500 tests on its own-brand meat ranges.

Chief executive Philip Clarke:

Conditions outside the UK remain challenging and we have broadly maintained our performance from the fourth quarter of last year. Whilst we are not expecting economic conditions to improve in the near term, we have a customer-focused plan for the year in each of our markets which takes this into account, and we will maintain a disciplined approach to investment and cash flow as outlined in April.

Dan Coen, director at advisory and restructuring firm Zolfo Cooper:

Tesco seems to have hit a rough patch. The recent horsemeat scandal, cold weather and poor performance in the US have all put a strain on Britain’s biggest grocer. Philip Clarke’s turnaround plan is yet to look convincing, but it is still early days.

Despite recent hiccups, Tesco is still leading the charge for British retail. The recent acquisition of restaurant chain Giraffe, along with its stake in coffee shop Harris + Hoole, are examples of the innovative ways the retailer is looking to diversify its offering for customers. By installing these outlets in its larger stores, Tesco will make more effective use of its vast floor space and become a more attractive destination for consumers.