Tesco’s Q1 figures outperformed analysts’ expectations, as the British supermarket posted its sixth consecutive quarter of growth.
Numerous market commentators hailed the group’s final results published in April as a sign the food retailer was “back on track,” despite a 28% drop in profits and a doubling pension deficit.
Tesco led the charge on the FTSE 100’s recovery on Friday morning, propelling the index back up 0.67% to 7,469 by mid-morning.
The supermarket’s own shares shot up by over 4% as trading opened, but soon slipped back down to 178.9p per share, 0.58% lower than the previous close.
Over the first quarter, Tesco was able to sustain its sales growth momentum across the group, delivering 1.0% higher sales on a like-for-like basis.
In the UK, like-for-like sales grew by 2.3%, driven by 2.7% higher like-for-like food sales.
Though this growth was helped somewhat by higher inflation, the supermarket chain resisted the temptation to increase prices at the same rate as inflation, a move that Vinay Sharma, senior trader at ayondo markets, said was “encouraging.”
Customer transactions increased by 1.3% over the first quarter, amounting to an additional 10 million customers relative to the previous year.
Tesco chief executive Dave Lewis agreed that this was one of the reasons for the sales boost:
“In tough market conditions, we have stayed true to our commitment to helping customers – working closely with our supplier partners to keep prices low.
“Customers have responded by doing more of their shopping with us and as a result we continue to grow volumes, particularly in fresh food.”
However, internationally like-for-like sales were down 3.0%, which the group said was the result of its decision to discontinue “unprofitable bulk selling” of products in Thailand, chiefly tobacco and alcohol.
