Tesco stems its sales decline after a year of turmoil

TESCO is expected to show it has stemmed falling sales after a traumatic year.

Results from the supermarket group due on Wednesday are forecast to show sales flat in the second quarter of the year after falling 1.3 per cent in the previous three months.

Sales on a like-for-like basis – which strips out the effect of store openings or closures – had been dropping even faster earlier this year as the group suffered from price wars and deflation, which has resulted in the price of food falling.

City analysts are divided on whether the group is moving fast enough to recover from recent problems, including last year’s accounting scandal involving the group overstating its profits.

Clive Black, retail analyst at Shore Capital, said: ‘We are looking for trading to stabilise in the UK with these figures, but I sense Tesco would be happy if there was a little more positive momentum at this stage. We are 15 months into David Lewis’s tenure and there are still more questions than answers.’

Lewis took over as chief executive after the accounting scandal and has set about re-ordering the group.

A report from HSBC last week argued that Tesco would win the supermarket wars thanks to its sheer size and economies of scale.

Few analysts are prepared to predict a profit figure for the half year, which will be announced this week. But HSBC is forecasting that the supermarket, which made a loss of £6.4billion last year, will show a profit of £546million for the financial year ending in February.