Richard Perks analysis on Tesco first quarter sales results

Commenting on Tesco first quarter sales results released today, Mintel’s Director of Retail Richard Perks said:

“Tesco First quarter figures were expected to be poor and they are with a like for like decline of 1.6% (inc petrol).”

“The good news is that the food performance has been better than in the last couple of months of last year. Horse DNA was found in just 4 out of 1500 products tested, so Tesco was unlucky and its chilled and frozen convenience foods were hit. But already the impact is wearing off.”

“The main reason for the weak sales is sorting out the general merchandise as Tesco repositions the business away from low priced entry level products to higher priced branded goods, especially in electricals (Out goes Technika, in comes Samsung). Other areas of non-foods, especially clothing, have performed well.”

“There’s a positive story here. Tesco has done the right things in improving service levels, spending more on the stores, improving product quality and investing in on-line and convenience stores. It’s willingness to plan for a future when the appeal of superstores will be declining sets it ahead of all its competitors. It was unlucky to be caught up in the horsemeat scandal, but the impact has been short-lived. It can fairly claim that the recovery programme for the UK is on track.”

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