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Sales growth slows down at Tesco Sales growth slows down at Tesco
(20 minutes later)
UK sales growth slowed to 2% in the three months to 22 November at Britain's biggest retailer, Tesco.UK sales growth slowed to 2% in the three months to 22 November at Britain's biggest retailer, Tesco.
The figure, which excludes new stores and sales of petrol, compares with growth of 4% in the previous quarter and 4.8% in the same period last year.The figure, which excludes new stores and sales of petrol, compares with growth of 4% in the previous quarter and 4.8% in the same period last year.
Tesco says its new discount brands have helped it attract an extra 300,000 customers a week into into its stores.Tesco says its new discount brands have helped it attract an extra 300,000 customers a week into into its stores.
While growth slowed in the UK, Tesco's overall sales worldwide grew by an impressive 11.7%.While growth slowed in the UK, Tesco's overall sales worldwide grew by an impressive 11.7%.
"We are pleased with our progress but we are also realistic - the current economic climate, and the strain this is putting on consumers everywhere, is something that all businesses are feeling, including ours," said Tesco chief executive Terry Leahy."We are pleased with our progress but we are also realistic - the current economic climate, and the strain this is putting on consumers everywhere, is something that all businesses are feeling, including ours," said Tesco chief executive Terry Leahy.
Discounts hit salesDiscounts hit sales
The supermarket group employs 440,000 people in about 4,000 stores across 14 countries.The supermarket group employs 440,000 people in about 4,000 stores across 14 countries.
We've seen more customers coming to us and more customers coming to us because of price, which we think is the most important thing over the next couple of years Andrew Higginson, finance director, Tesco Check Tesco's share price
Tesco said in its statement that the introduction of its discount brands had knocked two or three percentage points off its sales figure for the UK, but that it had boosted sales volumes by attracting extra customers.Tesco said in its statement that the introduction of its discount brands had knocked two or three percentage points off its sales figure for the UK, but that it had boosted sales volumes by attracting extra customers.
But figures in The Times newspaper this morning suggest that Tesco may be losing customers to its rivals in the UK. But switching figures from TNS Worldpanel suggest that Tesco may be losing business to its rivals in the UK, according to the Times newspaper.
It has obtained figures from TNS Worldpanel indicating that in the 12 weeks to 2 November, £22m of spending was switched from Tesco to Asda, £10m from Tesco to Aldi and almost another £10m to Morrisons. The figures indicate that in the 12 weeks to 2 November, £22m of spending was switched from Tesco to Asda, £10m from Tesco to Aldi and almost another £10m to Morrisons.
Asda reported 6.9% growth in like for like sales for the three months to the end of September while Sainsbury sales grew 4.3% in the 16 weeks to 4 October.Asda reported 6.9% growth in like for like sales for the three months to the end of September while Sainsbury sales grew 4.3% in the 16 weeks to 4 October.
Tesco has been hit harder than both of them because of its greater sales of non-food items, which have been affected more severely by the downturn.Tesco has been hit harder than both of them because of its greater sales of non-food items, which have been affected more severely by the downturn.
But its finance director said that it had seen the slowdown coming and had been preparing for it by cutting prices.
"While that's a little bit painful in terms of the sales value that comes through, in terms of the underlying trends within the business we've seen a really good response to that," Andrew Higginson said.
"So we've seen more customers coming to us and more customers coming to us because of price, which we think is the most important thing over the next couple of years."
Korean boostKorean boost
In its US brand, Fresh & Easy, Tesco is understandably pleased to have decided not to speed up its rate of new store openings, given what it says is "the severity of the economic slowdown in some geographic markets there".In its US brand, Fresh & Easy, Tesco is understandably pleased to have decided not to speed up its rate of new store openings, given what it says is "the severity of the economic slowdown in some geographic markets there".
But it added that despite the severity of the US economic slowdown, its first stores have shown sales growth.But it added that despite the severity of the US economic slowdown, its first stores have shown sales growth.
In Asia sales grew by 29.4%, helped by the Homever acquisition and in spite of the depreciation of the Korean won against UK sterling.In Asia sales grew by 29.4%, helped by the Homever acquisition and in spite of the depreciation of the Korean won against UK sterling.
Tesco also says that it soon hopes to complete its acquisition of the remaining 50% of Tesco Personal Finance (TPF) from Royal Bank of Scotland Group.Tesco also says that it soon hopes to complete its acquisition of the remaining 50% of Tesco Personal Finance (TPF) from Royal Bank of Scotland Group.