City Talk

A roundup of financial news from industry players

Tesco sales growth lags

Tesco has announced its largest quarterly sales growth in the UK for two years. Like-for-like sales rose by 4.3% in the first quarter of this year, boosted by sales of the its Finest Food range.

The growth is an improvement on the 3.7% increase of the previous quarter, but Tesco still lags behind its main rivals in growth. Tesco announced a record annual profit for a UK retailer of 2.95bn in April with group sales, excluding petrol, rising by 12.6% in the quarter to May 30.

This was boosted by 20.1% growth in international sales, assisted by the weak pound, the new Korean business Homever, and a rise in US sales of 174%. Tesco's finance director Laurie McIlwee, said there is "room for optimism in the UK with the market stabilising and not getting any worse".

Sainsbury's growth

Sainsbury also reported its strongest quarterly sales growth for more than 10 years and took the opportunity to raise 432m from the market to speed up an expansion programme while property prices are low.

Capital expenditure will be boosted from 800m to 1bn. Sainsbury intends to increase its UK selling space by 15% by March 2011 - adding another 2.5m sq ft. 35 stores are to be extended and 50 new stores opened. Sales over the 12 weeks to 13 June rose by 7.8% excluding fuel and VAT.

Most of the growth in the last quarter was driven by a 50% increase in the Basics range and slashed prices for 7,000 items. Customer numbers have grown to 18.5m a week.

Morrisons on a roll

Morrisons announced a like-for-like sales rise of 8.2% in the first quarter, driven by price cuts, together with attracting wealthier customers looking to cut their shopping bills. Morrisons reckons it is taking customers from all its main competitors.

Chief executive Marc Bolland, said the retailer had gained an extra one million customers since the start of the year. He emphasised "this is a particularly good result which is on top of the similar level of growth we reported in last year's first quarter update". In some hard selling stores, like-for-like sales have climbed by 25%.

Morrisons has cut the prices of 8,000 popular lines and launched 5,000 price promotions.