Tesco UK sales hit by weak consumer spending

| June 14, 2011 | 0 Comments

Supermarket giant Tesco has today reported a fall in UK like-for-like sales but said overseas sales remained strong.

British shoppers continue to rein in their spending due to economic uncertainty and Government spending cuts which led to a fall of 0.1% in sales for the 12 week period to 28 May – worse than the 0.6% rise expected by analysts.

The weakness in consumer spending continues to raise fears over the strength of the economic recovery. Petrol prices, food costs and utility bills continue to rise, squeezing household budgets.

However, on a positive note, Tesco, which is the UK’s largest grocer, said it was still outperforming some of its rivals and said sales of its “Finest” food range grew 10%, as “customers seek out quality alternatives to eating out”.

In addition, sales at its loss-making Fresh & Easy convenience stores in the US saw an improvement with like-for-like sales growth rising by 11%.

Meanwhile, the group continues to benefit from a strong Asian market with good sales growth noted in South Korea, China and Thailand.

Finally, rival Sainsbury’s will unveil its results tomorrow with analysts expecting a 1.3% rise in underlying sales for the 12-week period to 11 June.

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