Published: 08 Dec 2011
Last Updated: 06 Nov 2012
Tesco may be the world’s third-largest retailer, but today it’s admitted that even its mighty stores aren’t immune to the squeeze in consumer spending. The supermarket said like-for-like UK sales (excluding fuel and VAT) dropped by 0.9% in the 13 weeks to the end of November. Now admittedly, that’s nothing when compared with the stratospheric falls other retailers are seeing. But it’s Tesco’s fourth consecutive quarter of falls in sales. If that was GDP growth, we’d be a year into a recession by now.
That 0.9% fall is unchanged from last quarter’s figure – although when you throw in VAT and petrol, sales in the UK actually grew, by 6.7%. What’s interesting is that the company seemed to imply that at least some of the fall was caused by its £500m Big Price Drop campaign, which slashed the prices of 3,000 products. ‘The Big Price Drop campaign… has lowered prices significantly’, causing a ‘deflationary effect… which has significantly reduced the rate of inflation in the business,’ it said. Funny how we never heard them saying inflation in the business is responsible for pushing up their results…
Laurie McIlwee, the company’s chief financial officer, added on this morning’s Today programme that ‘against the backdrop of a tougher market and the fact that we’ve put such significant deflation into our sales… it’s actually quite a good performance.’ You keep telling yourself that…
Not one for putting all its free-range mixed weight eggs in one basket, though, the supermarket’s sales outside its 2,700 UK stores were significantly more encouraging, with total group sales rising by 7.2%. That was particularly evident in the USA, where the company has so far struggled to make waves, but sales grew by 11.9% (although that’s down from the previous quarter’s 12.4%), while European sales rose by 0.9% and sales in Asia rose by 0.8%.
Nevertheless, analysts don’t seem terribly impressed by the chain’s performance: while Seymour Pierce’s Kate Calvert called the results ‘uninspiring’, Hargreaves Lansdown’s Richard Hunter said they ‘mirror the wider inertia in the sector’. Which may be a valid excuse for some – but Tesco’s shareholders are unlikely to be sympathetic.
That 0.9% fall is unchanged from last quarter’s figure – although when you throw in VAT and petrol, sales in the UK actually grew, by 6.7%. What’s interesting is that the company seemed to imply that at least some of the fall was caused by its £500m Big Price Drop campaign, which slashed the prices of 3,000 products. ‘The Big Price Drop campaign… has lowered prices significantly’, causing a ‘deflationary effect… which has significantly reduced the rate of inflation in the business,’ it said. Funny how we never heard them saying inflation in the business is responsible for pushing up their results…
Laurie McIlwee, the company’s chief financial officer, added on this morning’s Today programme that ‘against the backdrop of a tougher market and the fact that we’ve put such significant deflation into our sales… it’s actually quite a good performance.’ You keep telling yourself that…
Not one for putting all its free-range mixed weight eggs in one basket, though, the supermarket’s sales outside its 2,700 UK stores were significantly more encouraging, with total group sales rising by 7.2%. That was particularly evident in the USA, where the company has so far struggled to make waves, but sales grew by 11.9% (although that’s down from the previous quarter’s 12.4%), while European sales rose by 0.9% and sales in Asia rose by 0.8%.
Nevertheless, analysts don’t seem terribly impressed by the chain’s performance: while Seymour Pierce’s Kate Calvert called the results ‘uninspiring’, Hargreaves Lansdown’s Richard Hunter said they ‘mirror the wider inertia in the sector’. Which may be a valid excuse for some – but Tesco’s shareholders are unlikely to be sympathetic.
