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Tesco growth picks up in the UK

Tesco said it was gaining momentum in its core UK market as overseas growth helped it to an 8.2 per cent year-on-year increase in third-quarter worldwide sales.

The country’s biggest retailer by market share said Christmas trading was beating its expectations, with the Xbox Kinect video game controller, a Microsoft accessory, selling particularly well.

Tesco said UK like-for-like sales during the third quarter were about 0.7-0.8 per cent up on the same period of 2009, excluding petrol sales and adjusting for value added tax fluctuations.

This figure compared with the 0.1 per cent and 0.4 per cent year-on-year growth rates of the preceding two quarters.

Tesco said UK sales growth was strengthening as it came to the end of the quarter, adding that it continued to see evidence of a “steady consumer recovery” and of shoppers trading up to more expensive items.

The group added that some of the impact it had been suffering from UK snow disruption in recent days could only be temporary.

Laurie McIlwee, finance director, said the response of some shoppers to the bad weather would be to buy in bulk: “Sales do come back, people do come back.”

After factoring in the new store openings that are excluded from Tesco’s like-for-like figures, sales in the UK were up 5 per cent year-on-year, excluding petrol sales.

This trailed the 15.7 per cent growth from Tesco’s international operations. Mr McIlwee said the international performance would have been better had it not been for unseasonably warm weather in north Asia towards the end of the period.

Like-for-like sales growth at Fresh & Easy, its lossmaking US arm, continued in line with recent trends at 9.8 per cent during the quarter, which ended in late November.

Overall, worldwide sales were up 8.8 per cent excluding petrol sales, and 8.2 per cent including petrol sales.

Tesco shares rose 1.3 per cent to 425½p in early morning trading in London on Tuesday.

Source : Adam Jones - FT.com

07 December 2010
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