By Geoff Percival
Tesco’s Irish operations have begun the retailer’s latest financial year where they left off the last with a 3% rise in sales noted for the three months to the end of May.
The first quarter increase followed Tesco Ireland recently logging a 2.7% rise in like-for-like sales — and a 4% increase in total sales volumes — for the 12 months to the end of February.
In its first quarter trading update, ahead of its AGM yesterday, the British supermarket giant said sales in the Republic grew “as customers continued to react positively to our more competitive price position, despite us experiencing store closures across our entire estate for done day as a result of adverse weather conditions in early March.”
Earlier this month, Tesco reclaimed top spot — in terms of market share — in the Irish grocery sector, with a 22.3% slice of the market.
After opening two more stores in its last financial year, the retailer now has 150 outlets in the Republic, with the Irish operations accounting for around 4% of the group’s total revenues.
A new drive to cut food prices boosted Tesco’s quarterly sales — group sales were up 1.8% in the period.
rose as much as 3% after the group also said it was delighted with initial progress at wholesaler Booker, which it acquired in March, and was on track to deliver its medium-term financial targets.
Tesco, forced to rebuild after a 2014 accounting scandal capped a dramatic downturn in trading, said a move to lower prices on fresh food brands towards the end of its first quarter reflected a growing confidence in its performance.
“It’s about us continuing to invest in the offer,” CEO Dave Lewis said, noting that prices in core lines had already been lowered by 6% to 7% over the previous three years.
The strong performance is timely as Tesco faces rising competition in a sector already reshaped by inroads made by German-owned discounters Lidl and Aldi.
Accustomed to being the biggest beast in the industry, Sainsbury’s proposed £7.3bn (€8.3bn) takeover of Asda would push Tesco down into second place. Mr Lewis declined to comment on the takeover, merely stating that Tesco would submit its views to the UK’s competition regulator in due course.
Mr Lewis also warned of the pressure on the industry. Three years ago he said the UK government’s approach on business rates, the minimum wage and apprenticeship levy was a potential “lethal cocktail” for the industry. “Constantly looking for the amount of money that’s coming out of bricks and mortar is not sustainable long term.” he said.
Additional reporting Reuters