Tesco’s UK sales growth has more than halved as it said the conflict in the Middle East had created “ongoing uncertainty for many households”.
The UK’s biggest retailer said comparable sales rose 1.8% to £13.4bn in the three months to the end of May, below both the 4.2% reported in the previous quarter and the 2.3% growth City analysts had expected.
The numbers were, however, lifted by an 8.9% rise in online sales and group sales rose 1% to £16.8bn.
The slowdown in UK sales growth reflected dampened consumer confidence in the face of higher fuel prices linked to the conflict in the Middle East. Exceptionally warm and sunny weather during the same period last year helped to increase sales of food and drink, distorting comparisons with this year.
Tesco said it had extended its pledge to match the German discounter Aldi on leading product lines to more than 2,000 of its small Express stores and launched 520 new products and said it was “well placed to build on our progress to date”.
Ken Murphy, the Tesco chief executive, said: “I am pleased with our progress in the first quarter, with customer satisfaction up strongly and continued sales growth building on the exceptional performance we delivered last year.
“With the conflict in the Middle East creating ongoing uncertainty for many households, we remain focused on giving customers the very best combination of price, quality and service.”
Sales at Tesco’s Booker wholesale arm fell 3.2% with sales to independent retailers and catering businesses falling back amid tough conditions on the high street.
Tesco said it still expected to meet profit expectations for the year. Analysts expect it to make £3.25bn in profit this financial year. However, shares fell 2.4% in early trading.
In April, Tesco gave a warning about a potential drop in annual profits, which would be the first fall since 2023.
In the year to 28 February profits rose by 8.5% to £2.4bn as sales rose by 4.3% to £66.6bn, including strong growth in the UK.
