Tesco posts best performance for seven years as sales rise 2.3pc

TESCO has unveiled its best quarterly sales performance for seven years after keeping a lid on price rises and pushing its fresh food range.

Britain’s biggest retailer reported that UK like-for-like sales had lifted by 2.3pc during the 13 weeks to May 27, helped by particularly strong growth in its fresh produce. Like-for-like food sales – at shops open for more than a year – rose 2.7pc during the quarter, compared to the year before. Dave Lewis, its chief executive, said putting up prices would be a “last resort”.

Fresh figures this week showed that inflation is now running at 2.9pc across the economy with household incomes being squeezed as real wage growth falters. However, Mr Lewis said Tesco’s rate of price rises were below the market average.

“We have stayed true to our commitment to helping customers – working closely with our supplier partners to keep prices low,” he said.

Tesco fell out with Unilever last year in a public row that was dubbed “Marmitegate” after the consumer goods giant attempted to raise prices of its products across the board. However, it has since raised the price of some products, such as a 250g jar of the yeast extract, which now costs £2.40.

Following a shock profit warning from sofa giant DFS on Thursday, there have been heightened concerns that consumers are already reining in spending, prompting a sell-off of retail stocks. Mr Lewis said that sales volumes within the business had been “broadly flat” and he believed the supermarket was in a stable position. “Recovery is continuing at Tesco, despite the squeeze on consumer incomes from weak wage growth and rising inflation,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.

Tesco said it had attracted 10m more customers during the quarter compared to 2015. The news came as the supermarket was fined a record £8m after a fuel leak at one of its petrol stations in Lancashire. Meanwhile, Tesco faced investors for the first time yesterday since announcing its £3.7bn takeover of wholesaler Booker.

Chairman John Allan said although Richard Cousins, an independent director, had quit in protest, he was “in a minority of one”. Despite concern over £142,000 “relocation fees” for Mr Lewis, 90.6pc of investors backed the remuneration report.