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| Tesco chief executive defends downturn amid 'dramatically reduced ambitions' | Tesco chief executive defends downturn amid 'dramatically reduced ambitions' |
| (4 months later) | |
| Tesco's recovery was thrown into doubt on Wednesday after UK sales fell in the first quarter. | Tesco's recovery was thrown into doubt on Wednesday after UK sales fell in the first quarter. |
| Chief executive Philip Clarke insisted the decline was part of a plan to move away from selling consumer electronics, such as flat-screen TVs. | Chief executive Philip Clarke insisted the decline was part of a plan to move away from selling consumer electronics, such as flat-screen TVs. |
| "Our plan is on track. We decided we're going to reduce our reliance on categories that quite frankly take up a lot of space and don't take a lot of money," Clarke said. | "Our plan is on track. We decided we're going to reduce our reliance on categories that quite frankly take up a lot of space and don't take a lot of money," Clarke said. |
| But he indicated he was unhappy with the drop in sales. "I couldn't sit here and say I'm happy with performance. As it happens, our plan was that we would take sales backwards this year while we make these changes." Tesco says like-for-like sales of non-food products would continue to slide throughout the year, but that would not hit group profits. | But he indicated he was unhappy with the drop in sales. "I couldn't sit here and say I'm happy with performance. As it happens, our plan was that we would take sales backwards this year while we make these changes." Tesco says like-for-like sales of non-food products would continue to slide throughout the year, but that would not hit group profits. |
| Overall sales from UK stores open longer than a year fell 1% in the three months to the end of May (excluding the impact of volatile petrol sales and VAT), marginally lower than analyst forecasts. Rivals Sainsbury's and Waitrose have both seen sales rise over a similar period. Tesco shares fell 2.8% in early trade to 354p. | Overall sales from UK stores open longer than a year fell 1% in the three months to the end of May (excluding the impact of volatile petrol sales and VAT), marginally lower than analyst forecasts. Rivals Sainsbury's and Waitrose have both seen sales rise over a similar period. Tesco shares fell 2.8% in early trade to 354p. |
| John Ibbotson, director of retail consultants Retail Vision, said: "Tesco UK dive-bombed during the first quarter. Declining non-food sales coupled with growing competition from a resurgent Sainsbury's and discounters like Aldi have been a major drag on performance." | John Ibbotson, director of retail consultants Retail Vision, said: "Tesco UK dive-bombed during the first quarter. Declining non-food sales coupled with growing competition from a resurgent Sainsbury's and discounters like Aldi have been a major drag on performance." |
| Tesco is in the process of changing the layout of 850 of its stores across the UK to put food first and shift the focus away from electronics, into areas such as cookery and dining products. Clarke said: "It's a big thing to do; there is no quick fix." | Tesco is in the process of changing the layout of 850 of its stores across the UK to put food first and shift the focus away from electronics, into areas such as cookery and dining products. Clarke said: "It's a big thing to do; there is no quick fix." |
| The retailer is also slimming down its huge hypermarkets. "I said over a year ago there was too much space in the UK. We have dramatically reduced ambitions to grow big stores." | The retailer is also slimming down its huge hypermarkets. "I said over a year ago there was too much space in the UK. We have dramatically reduced ambitions to grow big stores." |
| Food sales were higher over the quarter but there was a small decline in frozen food and ready meals following the horsemeat scandal. Sales of both have picked up in recent weeks and Clarke said the impact of that affair was "largely behind us". | Food sales were higher over the quarter but there was a small decline in frozen food and ready meals following the horsemeat scandal. Sales of both have picked up in recent weeks and Clarke said the impact of that affair was "largely behind us". |
| Group sales rose 1.8% in the 13 weeks to May 25. Looking ahead, Clarke said the economic climate remained gloomy. "Things are still difficult for consumers in the UK. It's five or six years now of relatively no growth in the economy." But, he said, different kinds of customers have a different outlook. "If you're on a fixed income, you think it's going to get worse in the future. Young professionals think things are going to get better." | Group sales rose 1.8% in the 13 weeks to May 25. Looking ahead, Clarke said the economic climate remained gloomy. "Things are still difficult for consumers in the UK. It's five or six years now of relatively no growth in the economy." But, he said, different kinds of customers have a different outlook. "If you're on a fixed income, you think it's going to get worse in the future. Young professionals think things are going to get better." |
| Like-for-like sales in Europe fell 5.5% in the first quarter and the retailer does not expect any improvement in the region's economy this year. | Like-for-like sales in Europe fell 5.5% in the first quarter and the retailer does not expect any improvement in the region's economy this year. |
| It said in a statement: "Consumers continue to exercise caution in their shopping habits, as they face the direct impact of a variety of austerity measures linked to the tough economic environment. The impact of these external pressures increased in Ireland, with a significant reduction in consumer sentiment and spending following the announced introduction of the local property tax on residential properties." | It said in a statement: "Consumers continue to exercise caution in their shopping habits, as they face the direct impact of a variety of austerity measures linked to the tough economic environment. The impact of these external pressures increased in Ireland, with a significant reduction in consumer sentiment and spending following the announced introduction of the local property tax on residential properties." |
| Tesco said the process of selling its US business Fresh & Easy remains "on track". | Tesco said the process of selling its US business Fresh & Easy remains "on track". |
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