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Tesco PLC says 1Q sales up 13.7 pc but UK sales growth rate slows

Tesco PLC says 1Q sales up 13.7 pc but UK sales growth rate slows

Tesco PLC, Britain's largest grocer, reported Tuesday that group sales rose 13.7 percent in the first quarter but that the rate of sales growth in nonfood categories in its core U.K. market had slowed.
Analysts said the report was at the lower end of market expectations.
The company's sales growth in the 13 weeks ending May 24 was led by a strong performance outside Britain, with so-called international sales up 26.6 percent at actual exchange rates and by 13.9 percent at constant rates. Sales in Europe were up 32.4 percent at actual rates and sales in Asia was up 16.7 percent.
At home, total sales were up 9.4 percent led by the soaring prices of petrol. Excluding petrol, like-for-like sales were up 3.5 percent, the company said in a trading update. It did not report earnings for the period.
"Although food category performance has been good, our rate of growth in nonfood has eased as consumers have become more cautious with their spending during recent months," the company said.
Tesco shares were down 2.4 percent at 392.4 pence (US$7.74) on the London Stock Exchange.
"These numbers are fine, without punching the lights out, with some mixed messages on the consumer," said Philip Dorgan, analyst at Panmure Gordon. "We believe that market conditions will get tougher over the next six months, but we expect Tesco to outperform its peers in food and to continue to do so in nonfood."
"Despite the cautious comments on UK nonfood, consensus forecasts are likely to be broadly unchanged following the trading update," said Sam Hart, analyst at Charles Stanley & Co. He rated the stock as "accumulate."
Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers, said the "noticeably less upbeat" trading statement was apt to mute the market's enthusiasm for Tesco.
"Nonetheless, the business as a whole remains one which is robust and as well equipped as any to weather the turbulent times ahead," Hunter said.
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http://www.tescocorporate.com