Tesco blames fuel price for UK sales dip
TESCO stoked fears over the financial pressures on British consumers yesterday by posting sales growth in all international regions except the UK.
The UK’s biggest supermarket blamed high petrol prices for eating into household incomes and causing an 0.1 per cent fall in UK sales excluding petrol and VAT in the past three months.
It added that a “cautious consumer environment” and “weak demand, particularly in general merchandise” had also hit sales of home goods.
Analysts had expected an 0.5 per cent increase. However, the decline was smaller than the previous quarter, when sales fell 0.7 per cent.
“High fuel costs continue to mean that customers have to direct some of their spending to petrol at the expense of their normal shopping and this remains a drag on both industry and our own like-for-like growth,” it said in a statement.
Total group sales rose 1.6 per cent on a like-for-basis excluding petrol sales but including VAT. Its US division, where it is rolling out Fresh & Easy stores, grew 11.1 per cent while Asian sales rose 3.2 per cent and Europe’s grew two per cent.
“Tesco’s trading update does little to reassure that underperformance in the UK is set to improve in the near future,” said Evolution Securities analyst Dave McCarthy. Seymour Pierce analyst Kate Calvert cut three per cent from Tesco’s 2012 pre-tax profit forecast to £3.94bn on the news.