Sales at Tesco’s UK stores fell 0.9% in the 13 weeks to 26 November 2011, the supermarket announced today.
Tesco blamed a fall in consumer confidence back to levels last seen in 2008 for the decline and insisted its Big Price Drop campaign was working.
Total group sales rose 5.4%, excluding fuel, despite difficult trading conditions in Asia; largely a result of flooding in Thailand.
Chief executive Philip Clarke said: “We have made good progress in our third quarter against the background of challenging conditions for consumers in many of our markets.
“In the UK, our increased investment in the shopping trip for customers is starting to deliver. The Big Price Drop campaign, now in its second phase, has lowered prices significantly for hard-pressed families and we are now being rewarded with stronger food volume growth.”
Tesco said demand remains week in non-food categories including clothing and electricals but its sales has improved in the latest period as a result of changes in range, space allocation and merchandising in Extra stores.
“We are also seeing positive customer reaction to the improvements in our general merchandise ranges,” said Clarke. “Whilst I am pleased with these early signs of stronger performance, a great deal more remains to be done and we are confident of delivering further improvements as we implement our plans.”
Tesco said it enjoyed good growth internationally and the disruption in Thailand caused by the flooding interrupted an otherwise strong sales trend.
Stores in Central Europe performed well with strong growth in Poland and Slovakia, said Tesco. Europe’s overall like-for-like sales growth strengthened to 0.9%, from 0.1% in quarter two, with a growing contribution coming from remodelled Extra hypermarkets.
In the US, Tesco said sales at Fresh & Easy were up over 29% in the quarter with double-digit like-for-like sales growth of 11.9%. Sales were driven by increased customer numbers and higher average spend. Tesco said it was pleased with the performance at new stores, which underscored the improvements to the offer it has introduced in recent months.