TIDMTSCO
RNS Number : 4803R
Tesco PLC
15 June 2018
Growth plans on track - ToTAL UK & ROI SALES UP 3.5%
Headlines (13 weeks ended 26 May 2018)
-- Delivering positive like-for-like sales growth for a tenth consecutive quarter
o Group like-for-like sales growth improved to 1.8% and UK &
ROI to 3.5%
o Booker consolidated from 5 March 2018, with like-for-like
sales growth of 14.3%
-- Continued improvement in customer offer
o Continued re-launch of over 10,000 own brand products; 2,850
completed to date
o Further investment in price at the end of 1Q focusing on our
exclusive fresh food brands
o Essential step towards establishing a more sustainable
non-food offer by closing Tesco Direct
-- Booker 'Joining Forces' programme well underway
o Good progress towards accessing new growth opportunities with
supplier partners
o 3,000 Booker products now fulfilled from Tesco Magor
distribution centre; Tesco Middleton distribution centre to support
Booker growth during the busy Summer trading period
o Positive initial response to 'Chef Central' at Bar Hill;
second trial concept opened in Beckton
-- Strong fresh food performance in Central Europe and Asia offset by specific market factors
o Fresh food like-for-like sales growth of 1.0% in Central
Europe and 4.5% in Asia
o Loss of six trading days in Poland and four in Slovakia due to
regulatory changes
o Improving performance in Asia towards end of quarter following
annualisation of bulk-selling impact in mid-April
Dave Lewis, Chief Executive:
"Our growth plans are on track and we are pleased with the
momentum in the business. We remain well-placed to serve our
customers better and deliver on our medium-term financial
ambitions. We are delighted with initial progress on Booker, and
are focused on delivering the synergy benefits that our merger
brings."
Like-for-like sales performance
1Q 2Q 3Q 4Q 1Q
2017/18 2017/18 2017/18 2017/18 2018/19
---------
UK & ROI 2.2% 2.1% 2.3% 2.4% 3.5%
--------- --------- --------- --------- ---------
UK 2.3% 2.1% 2.3% 2.3% 2.1%
ROI 0.2% 2.0% 3.3% 5.3% 3.0%
Booker n/a n/a n/a n/a 14.3%
--------- --------- --------- --------- ---------
Central Europe (0.4)% 0.6% 0.8% 0.4% (1.0)%
--------- --------- --------- --------- ---------
Asia (6.0)% (10.7)% (9.6)% (14.0)% (9.0)%
--------- --------- --------- --------- ---------
Group 1.0% 0.6% 0.9% 0.4% 1.8%
--------- --------- --------- --------- =========
Serving Britain's customers a little better every day
Trading Update
Group like-for-like sales grew by 1.8% for the 13 weeks to 26
May 2018, representing a tenth consecutive quarter of positive
growth. Total sales at constant exchange rates were up 1.8%. At
actual exchange rates, sales grew by 2.3% including a 0.5% positive
foreign exchange translation effect.
Like-for-like sales in the combined UK & ROI business grew
by 3.5% as we continue to improve our customer offer and access new
growth opportunities with Booker.
Tesco UK like-for-like sales were up 2.1%. Performance improved
through the quarter (after taking the timing of Easter into
account), recovering from the impact of adverse weather conditions
experienced in March. We continue to focus on improving our
customer offer and are now more than a quarter of the way through
our re-launch of over 10,000 own brand products. In addition, at
the end of the quarter, we invested in a number of price cuts
focused on our exclusive fresh food brands to offer even better
value for our customers.
Like-for-like sales in Booker grew by 14.3% including tobacco
(12.4% growth excluding tobacco), driven by a strong underlying
performance and new business wins. Following on from the positive
initial response to the 'Chef Central' store at Bar Hill, we opened
a second trial concept last week within the Tesco Extra store at
Beckton. In addition, we have extended the two-store trial of the
top 30 selling Booker lines, rolling out a similar range to over 50
more Tesco stores. In May, we introduced 3,000 Booker lines into
our Tesco Magor distribution centre, utilising spare capacity and
enabling us to reduce the lead time on orders for Booker customers
across the South West. Our Middleton distribution centre will also
support growth in Booker during the busy Summer trading period.
During the quarter, we took an important decision to refocus our
non-food business by closing Tesco Direct, which will cease trading
on 9 July 2018. Customers shopping on Tesco.com can already buy
some products from our toys, homeware and cookware ranges and we
will selectively build on this offer, creating a simpler online
experience for customers. Our like-for-like sales performance for
the UK will be adjusted to remove the impact of the closure of
Tesco Direct from July onwards.
Our grocery home shopping business performed strongly in the
quarter, with both transactions and basket size growing
year-on-year, and more customers using our Delivery Saver
subscription service. We are continuing to roll out further
innovations including the Spoon Guru Lifestyle & Dietary search
filters and improvements to our website and customer
application.
Clothing like-for-like sales were up 1.7% with full price sales
participation in stores increasing by 140 basis points year-on-year
to over 87%. Whilst general merchandise as a whole negatively
impacted total sales growth as we continue to refine our ranges,
seasonal categories performed particularly well.
In May, we opened our new 'Heart' building in Welwyn Garden
City, representing the final step in the relocation project from
Cheshunt and bringing together all of our innovation and learning
capabilities into one place. It includes new Product Development
Kitchens and a New Food Experience space allowing our development
chefs, product teams and suppliers to work together seamlessly.
Like-for-like sales in ROI grew by 3.0% as customers continued
to react positively to our more competitive price position, despite
us experiencing store closures across our entire estate for one
day, as a result of adverse weather conditions in early March.
Despite a strong underlying performance in Central Europe, with
growth in fresh food and improving performance in Hungary, overall
like-for-like sales were down (1.0)% in the quarter, due to the
impact of regulatory changes. In Poland, changes to Sunday trading
regulations resulted in six fewer trading days and in Slovakia,
changes to public holiday opening times resulted in four fewer
days. Combined, this impacted sales for the region by c.(1.0)% to
(1.5)%.
Asia like-for-like sales were down (9.0)%, although performance
improved towards the end of the quarter as our decision to remove
bulk-selling was annualised in April. We are continuing to see a
sales impact from the issuance of Government welfare cards which
cannot be redeemed in modern retail chains, along with the
deflationary effect of our continued price investment. Despite
this, the pace of sales decline in Asia eased throughout the period
and fresh food performed strongly with like-for-like sales growth
of 4.5%.
Tesco Bank sales increased by 7.0% in the quarter, with secured
lending forming an increasingly significant part of the portfolio.
Mortgage products now comprise 27% of the overall lending
portfolio, up more than four percentage points year-on-year.
Contacts
Investor Relations: Chris Griffith 01707 912 900
Media: Jane Lawrie 01707 918 701
Philip Gawith, Teneo 0207 420 3143
A call for investors and analysts will be held today at
8.00am.
Dial in number: 0800 358 9473 (toll free) / +44 (0) 333 300 0804
Access Code: 37330494#
A recording will be available on +44 (0) 333 300 0819 and access
code 301233675# until 15 July 2018.
Appendix 1
Total Sales Performance at Actual Rates (Exc. VAT, Exc.
Fuel)
1Q 2Q 3Q 4Q 1Q
2017/18 2017/18 2017/18 2017/18 2018/19
---------------- ---------
UK & ROI 2.0% 2.5% 2.7% 2.9% 3.5%
--------- --------- --------- --------- ---------
UK 1.6% 2.1% 2.5% 2.3% 1.9%
ROI 9.2% 10.0% 7.1% 13.3% 9.5%
Booker n/a n/a n/a n/a 12.8%
--------- --------- --------- --------- ---------
Central Europe 8.4% 8.8% 3.1% 4.5% 0.7%
--------- --------- --------- --------- ---------
Asia 8.5% (4.0)% (8.9)% (11.5)% (6.8)%
--------- --------- --------- --------- ---------
Tesco Bank 4.8% 4.8% 4.9% 1.1% 7.0%
--------- --------- --------- --------- ---------
Group 3.4% 2.7% 1.6% 1.5% 2.3%
--------- --------- --------- --------- =========
Appendix 2
Total Sales Performance at Constant Rates (Exc. VAT, Exc.
Fuel)
1Q 2Q 3Q 4Q 1Q
2017/18 2017/18 2017/18 2017/18 2018/19
---------------- ---------
UK & ROI 1.4% 2.1% 2.5% 2.7% 3.4%
--------- --------- --------- --------- ---------
UK 1.6% 2.1% 2.5% 2.4% 1.9%
ROI 0.0% 2.1% 3.8% 9.4% 6.8%
Booker n/a n/a n/a n/a 12.8%
--------- --------- --------- --------- ---------
Central Europe (1.7)% (1.2)% (1.3)% (2.0)% (2.9)%
--------- --------- --------- --------- ---------
Asia (4.8)% (10.8)% (9.6)% (12.4)% (7.2)%
--------- --------- --------- --------- ---------
Tesco Bank 4.8% 4.8% 4.9% 1.1% 7.0%
--------- --------- --------- --------- ---------
Group 0.5% 0.4% 0.9% 0.5% 1.8%
--------- --------- --------- --------- =========
All like-for-like and total sales growth rates shown above
include Booker in the base (where relevant).
On a statutory basis (without Booker in the base), total Group
sales growth is 12.1%.
Notes
Like-for-like sales performance is shown at constant exchange
rates. All other figures are quoted at actual exchange rates, exc.
VAT and exc. fuel unless otherwise stated.
Growth rates are shown on a continuing operations basis.
Growth rates are based on comparable days for the current year
and the previous year comparison. For example, for UK and ROI,
these results are for the 91 days to 26 May 2018 and 27 May 2017
respectively. Following the completion of our merger with Booker on
5 March 2018, Booker results are for the 82 days to 25 May 2018 and
26 May 2017 respectively.
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END
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