Tesco's UK sales fall as Clarke warns on low consumer confidence

Britain’s biggest supermarket, Tesco, has suffered another drop in sales in what it called “a challenging quarter for the industry as a whole”.

Defending the results, chief executive, Philip Clarke said: "We always said it would take time."

Mr Clarke warned that consumer confidence globally is being undermined. He said: "We are reporting subdued trading across all of our markets.

"Customers don't have any more disposable income than a year ago."

Like for like UK sales excluding VAT and petrol fell 1.5 per cent, the retailer’s third successive slump in quarterly trading.

Global sales rose by 2.2 per cent in the 13 weeks to May 26, despite “subdued consumer confidence”, the company said.

Growth in sales in Thailand and South Korea cushioned lower trading in China. Overall, total sales in Asia rose by nine per cent.

However, local issues were impacting on Tesco's overall performance. In South Korea new restrictions on opening hours and the government's ability to close stores for two days a month is affecting sales.

Meanwhile, in the Czech Republic, an increase in VAT has led to a 4.5 per cent fall in sales.

At the same time, better results in Poland, Slovakia and the Republic of Ireland boosted Europe’s like for like sales, which were up overall by 0.4 per cent.

But Tesco said in a statement: “Continued uncertainty over the future of the Eurozone and the potential impact of any further disruption has resulted in very low consumer confidence, particularly in Central Europe.”

Mr Clarke warned that rising taxes and oil prices were global issues that are affecting most territories.

In April, the supermarket giant announced a £1 billion makeover of its UK operation.

Chief executive Philip Clarke said the company was “rapidly implementing” its plan, with some 4,300 additional staff having been recruited and more than 145,000 staff given specialist training.

At least 100 stores have been upgraded since the start of the year.

“Our customers are seeing the evidence of the changes we’re making and they’re telling us they like what they see,” Mr Clarke added.

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