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Tesco blames snow for weak trading

Tesco has blamed snow for a pre-Christmas sales disappointment in the UK, arguing that the severe weather had prompted last-minute shoppers to buy many non-food items on the high street instead of in its out-of-town stores.

Its willingness to highlight the adverse weather conditions was in sharp contrast to the position taken by J Sainsbury, a key competitor that had a more buoyant run-in to the holidays.

In a Christmas trading update on Thursday, Tesco said sales in its core UK market had grown 0.6 per cent year-on-year in the six weeks to January 8 after stripping out store openings and petrol sales but including VAT fluctuations.

That was below the 1.7 per cent average forecast of analysts polled by Reuters, as well as being a slowdown on the 1.5 per cent growth recorded in the preceding three months.

Overall, however, group sales rose 7.6 per cent, buoyed by rapid growth in Asia, particularly China and Thailand.

Laurie McIlwee, finance director, said UK like-for-like sales of non-food items had declined by 1.5 per cent during the period, in spite of strong sales of toys, books and games. Food sales were up 1.7 per cent.

Mr McIlwee said there had been a limit to the company’s ability to mitigate the effect of the unusually adverse weather conditions in the run-up to the holiday period.

“We can’t clear customers’ drives and roads that get to the main highways,” he said, adding that Tesco’s performance during the period had also suffered from comparison with strong figures a year earlier

Source : Adam Jones - FT.com

13 January 2011
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