Tesco have 'started the year on track', despite a 'continued, difficult economic environment for consumers', according to Tesco chief executive Philip Clarke.
Clarke's comments came in a first-quarter interim management statement for the 13 weeks ended 25 May 2013, a month after the ailing retailer set out its plans for a return to growth.
Worryingly for the retailer, like-for-like sales in the UK decreased by 1.0% in the quarter, excluding fuel.
Tesco consumers in international markets 'continue to face challenging conditions, particularly in Europe'. Group sales rose 1.8% in the 13 weeks to May 25, while total sales in Europe excluding petrol were up by 0.1% at actual exchange rates and declined by (3.0)% at constant rates. Total sales in Asia grew by 10.9% at actual exchange rates and by 2.8% at constant rates. Like-for-like sales declined by (3.8)%, largely driven by the continuing impact of the regulatory restrictions on opening hours in Korea. Tesco's Chinese business has been 'affected by consumer concern over the bird flu crisis and weaker demand for pork products following a national food safety scare'. Tesco's decision to exit the US market 'continues on track'.
While Clarke claimed to be 'encouraged' by recent the performance of fresh food categories, the chief executive also made reference to the "small but discernible impact on frozen and chilled convenience food sales due to the customer response to equine DNA being detected in four products." The performance of these two categories 'has also picked up in recent weeks', according to the retailer, noting that it has carried out almost 1500 tests on Tesco own-brand meat since January. Indeed, speaking today at a press conference, Clarke asserted that the horsemeat scandal is "well behind us now".
New store openings were focused on convenience in line with plans and work on the 'Refresh' store revamping program has begun successfully according to the retailer, with nearly 40 Express stores relaunched in the first three months of the year alone.
"Conditions outside the UK remain challenging and we have broadly maintained our performance from the fourth quarter of last year," said Clarke.
"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," he added.
