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Tesco Sales Slowdown: Weather Blamed for Dip
20 Jun
Summary
- Tesco's Q1 U.K. like-for-like sales grew only 1.8%, missing forecasts.
- Unseasonably cold weather, not conflict, cited for suppressed sales.
- Premium lines and online delivery services showed strong growth.
Tesco PLC's first-quarter trading statement revealed a notable slowdown in sales momentum, leading to a 3% tumble in its share price on Thursday. The U.K. retailer reported a 1.8% increase in like-for-like sales for the thirteen weeks ended May 30, which was below the anticipated 2.7% growth.
Chief Executive Ken Murphy suggested that unseasonably cold and rainy spring weather significantly suppressed seasonal sales, playing a more substantial role than the ongoing Middle Eastern conflict in affecting household spending. This weather pattern discouraged large outdoor social events, thereby limiting expenditures on high-margin barbecue and fresh produce.
Group like-for-like sales internationally saw only a 1.0% uptick to £16.83 billion. This performance was heavily impacted by a 3.2% revenue contraction in the Booker wholesale arm, attributed to the strategic termination of a lower-margin contract and tough year-on-year comparisons.
In contrast, Tesco's premium and digital offerings demonstrated resilience. The Tesco Finest range grew by 9%, supported by new product formulations. U.K. online grocery demand increased by 8.9%, with same-day Whoosh delivery orders soaring by 30%.
