Tesco (LSE: TSCO.L - news) 's sales have fallen 1.5pc in the UK, its third consecutive fall in
quarterly trading.
The UK's largest retailer revealed that like-for-like sales, excluding both VAT and petrol, dropped, while international sales slowed in the 13 weeks to May 26.
In Asia, total sales grew by 9pc, with "positive like-for-like sales growth and a good contribution from new store openings", Tesco said in a trading update . Sales growth in Thailand and South Korea offset weaker trading in China.
In Europe, like-for-like sales rose 0.4pc, helped by improved performances in Poland, Slovakia and the Republic of Ireland (Xetra: A0Q8L3 - news) , which delivered its first full quarter of positive like-for-like sales growth since 2010.
However, Tesco said the eurozone debt crisis has created "very low consumer confidence", with a fall in "general merchandise, clothing and electrical performance" reflecting this.
Fresh & Easy, Tesco's US business, saw a slowing in like-for-like sales growth.
"Tesco has performed robustly in the first quarter despite subdued consumer confidence in all our markets, said Philip Clarke, chief executive. "Internationally, like-for-like sales growth proved resilient, despite slowing economic growth in China and the emerging impact of recently introduced shopping hours legislation in South Korea. Against the backdrop of continuing uncertainty in the eurozone, it is pleasing to see that our businesses have largely sustained their performance."
The company added that although not included in this quarter's results, it saw its biggest ever week (outside of a Christmas period) in the run-up to the Diamond Jubilee, with more than £1bn in sales.
Phil Dorrell, a director at retail consultants Retail Remedy, said: "After the terrible performance last year and saying they would throw the kitchen sink at it to improve things, we expected to see far stronger numbers from Tesco.
"Tesco is treading water but the paucity of its long-term marketing strategy could still drag it under. Tesco... continues to offer a bland and soulless shopping experience and will be hard pushed to maintain its market share over this financial year. The leadership still seems to be focused on the quick fixes, more appropriate to running a store than a business.
"Despite the clear and numerous issues, Tesco is a fantastically successful business and its problems can be solved. With its ubiquitous presence in the UK, not to mention ambition and ferocity, it can quickly hurt every other retailer once it gets back on track. It's a matter of when and under what leadership."
City analysts had expected that underlying sales at Tesco’s 2,900 UK stores would fall by about 1.7pc in the first quarter, after a 1.6pc fall in UK like-for-likes in the fourth quarter to the end of February.
Over Christmas and the new year, Tesco revealed a 2.3pc drop the grocer’s worst performance for decades, which prompted a major profit warning and the first slip in annual profits in the UK for at least 30 years.
Mr Clarke announced a £1bn investment in extra staff, improving customer service, new products and a slicker internet site.
Tesco shares rose 1.7pc to 308.5p in early trading.
The UK's largest retailer revealed that like-for-like sales, excluding both VAT and petrol, dropped, while international sales slowed in the 13 weeks to May 26.
In Asia, total sales grew by 9pc, with "positive like-for-like sales growth and a good contribution from new store openings", Tesco said in a trading update . Sales growth in Thailand and South Korea offset weaker trading in China.
In Europe, like-for-like sales rose 0.4pc, helped by improved performances in Poland, Slovakia and the Republic of Ireland (Xetra: A0Q8L3 - news) , which delivered its first full quarter of positive like-for-like sales growth since 2010.
However, Tesco said the eurozone debt crisis has created "very low consumer confidence", with a fall in "general merchandise, clothing and electrical performance" reflecting this.
Fresh & Easy, Tesco's US business, saw a slowing in like-for-like sales growth.
"Tesco has performed robustly in the first quarter despite subdued consumer confidence in all our markets, said Philip Clarke, chief executive. "Internationally, like-for-like sales growth proved resilient, despite slowing economic growth in China and the emerging impact of recently introduced shopping hours legislation in South Korea. Against the backdrop of continuing uncertainty in the eurozone, it is pleasing to see that our businesses have largely sustained their performance."
The company added that although not included in this quarter's results, it saw its biggest ever week (outside of a Christmas period) in the run-up to the Diamond Jubilee, with more than £1bn in sales.
Phil Dorrell, a director at retail consultants Retail Remedy, said: "After the terrible performance last year and saying they would throw the kitchen sink at it to improve things, we expected to see far stronger numbers from Tesco.
"Tesco is treading water but the paucity of its long-term marketing strategy could still drag it under. Tesco... continues to offer a bland and soulless shopping experience and will be hard pushed to maintain its market share over this financial year. The leadership still seems to be focused on the quick fixes, more appropriate to running a store than a business.
"Despite the clear and numerous issues, Tesco is a fantastically successful business and its problems can be solved. With its ubiquitous presence in the UK, not to mention ambition and ferocity, it can quickly hurt every other retailer once it gets back on track. It's a matter of when and under what leadership."
City analysts had expected that underlying sales at Tesco’s 2,900 UK stores would fall by about 1.7pc in the first quarter, after a 1.6pc fall in UK like-for-likes in the fourth quarter to the end of February.
Over Christmas and the new year, Tesco revealed a 2.3pc drop the grocer’s worst performance for decades, which prompted a major profit warning and the first slip in annual profits in the UK for at least 30 years.
Mr Clarke announced a £1bn investment in extra staff, improving customer service, new products and a slicker internet site.
Tesco shares rose 1.7pc to 308.5p in early trading.
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