--Tesco reported higher comparable sales for the first quarter

--Sales growth slowed down in its core U.K. market

--Grocer said its profit outlook for the year remains unchanged


By Adria Calatayud


Tesco PLC said Friday that first-quarter retail sales grew on year on a comparable basis, but at a slower pace as the boost from the coronavirus pandemic began to fade, and said its profit outlook for the full year remains unchanged.

The U.K.'s biggest grocer by market share said retail sales for the quarter to May 29 were 13.36 billion pounds ($18.61 billion), up 1.3% on the previous year at actual currency rates.

In the U.K. and Ireland, Tesco's like-for-like sales increased 1.3% on the previous year and 8.7% on a two-year basis, it said.

Tesco's first-quarter comparable sales in the U.K. grew 0.5% on year and were up 9.3% when compared with the same period two years ago. This represents a slowdown from its like-for-like sales growth of 7.7% for fiscal 2021 as a whole, when the retail sector received a significant boost from Covid-19 lockdowns.

"We delivered a strong performance in the first quarter, even as we lapped the high demand of last year due to the pandemic," Chief Executive Ken Murphy said.

Shares at 0730 GMT were down 1.3% at 228.05 pence and are broadly in line with their level a year ago.

The company said online demand remains high in the U.K. at 1.3 million orders per week, with first-quarter sales up 22% compared with last year and up 82% on a two-year basis.

Like-for-like sales at Booker, the group's wholesale arm, grew 9.2% on year, benefiting from the reopening of the hospitality sector. Catering like-for-like sales jumped 68% for the quarter, the company said.

Tesco said sales from its bank operations declined 10% for the first quarter as a whole but began to grow later in the quarter as it recovered from the effects of the coronavirus pandemic.

The company said its profit guidance from April remains unchanged. Tesco said then that it expected a strong recovery in profitability and retail free cash flow, as the majority of extra costs booked in fiscal 2021 as a result of the pandemic wouldn't be repeated, and guided for retail operating profit for fiscal 2022 to be similar to that of fiscal 2020.

Tesco in April said it expected some of the additional sales volumes it added last year in the U.K. as a result of the pandemic to fall away as coronavirus-related restrictions ease.

Interactive Investor Head of Markets Richard Hunter said Tesco's first-quarter performance could suggest it is holding on to some of the market share it took last year.

"It is no mean feat to have nudged sales higher than at the height of the pandemic last year, and significantly ahead of two years ago," Mr. Hunter said.


Write to Adria Calatayud at adria.calatayud@dowjones.com


(END) Dow Jones Newswires

June 18, 2021 03:52 ET (07:52 GMT)

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