The UK’s biggest supermarket, Tesco has reported a decline in UK sales over the past quarter, adding to the difficulties the firm has faced over the last 18 months since the departure of former chief executive Sir Terry Leahy.
Tesco Chief Executive Philip Clarke has promised to increase efforts to make fundamental changes to the way the grocver operates in a bid to return Tesco to its former glory.
Mr Clarke said: "We are making good progress with our plans to improve the shopping trip for customers and are seeing steady increases in customer perception scores across all aspects of our offer."
Like-for-like sales in the UK, excluding petrol and VAT, fell by 1.0 per cent in the 13 weeks to the 25th May 2013. This represents a trend that has been ongoing for most of the last three years and puts doubt over the effectiveness of Philip Clarke’s plans to turn the fortunes of Tesco around.
Mr Clarke has invested almost £1 billion on 8,000 new staff, revamped stores, new food ranges and lower prices.
Group sales including petrol went up by 1.8 per cent but only due to currency exchange benefits. Without these, group sales were flat in the 13 weeks to May 25th 2013.
In April, Tesco announced its first fall in profits for more than 20 years and also announced it was to close its US business, Fresh & Easy, at a cost of £1.2 billion.
Phil Dorrell, director of retail consultancy Retail Remedy, said: Despite throwing the kitchen sink at the problem, Philip Clarke has failed to turn around Tesco’s sagging fortunes.
“Like-for-like sales continue to fall in the UK and Europe as he battles with Terry Leahy’s apparently toxic legacy. The dip is turning into a dive.
“Despite taking on 8000 more staff, refurbishing its 300 flagship stores and a series of relentless marketing and promotional campaigns, Tesco still has an image problem.
Tesco said that the horsemeat scandal had led the firm to test 1,500 own-brand products that contained meat. It found four products that tested positive which it withdrew and then reintroduced to the market after finding new suppliers.
Tesco said the scandal had a "small but discernable impact" on the sale of frozen and chilled convenience food, the only two sectors of its food range that saw a weaker performance than had been seen in the final two months of 2012.
It now plans to ensure that meat production is undertaken closer to home and has promised that all chickens sold in the UK will come from UK farms by July this year.
Tesco’s online business continued to grow and it now has 169 “Click & Collect” grocery collection points across the UK.
Philip Clarke, Tesco Chief Executive said: "In April, we set out our approach for growth and returns for the Group, including a number of appropriate and realistic objectives for the years ahead and we have started the year on track, despite a continued difficult economic environment for consumers.
The firm said that the introduction of its ‘price promise’ guarantee had proved popular and Tesco also reported that it is making good progress on its programme of store refurbishments.
However, non-food sales dropped which prompted Tesco to announce that it is cutting back on the sale of consumer electrical goods.
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