Tesco suffers from credit crunch in Q1

Tesco has reported a bigger-than-forecast slowdown in sales in its core UK business for its first quarter – particularly in non-food categories.

Like-for-like sales in the 13 weeks to May 24th rose by 3.5 per cent excluding petrol and new store openings – winding down from the growth of over four per cent filed at Tesco’s full-year results in April.

The retail giant said that its rate of growth in non-food in the UK, which accounted for more than a fifth of last year’s revenues, has eased as consumers have become more cautious about their spending in recent months”.

However, total group sales rose by 13.7 per cent, helped by favourable exchange rates overseas, with the supermarket drawing nearly two-fifths of its revenues from outside the UK.

In the UK, total sales including petrol rose by 9.4 per cent, assisted by the surging price of oil in recent weeks, or by 6.4 per cent on a like-for-like basis.

International sales rose by 26.6 per cent, with the strongest performance coming from continental Europe, up 32.4 per cent to 392.2p.