Tesco’s sales are motoring – but deficit grows to £5bn

TESCO could be forced to hike payments into its staff pension scheme – after an increase in the deficit to as much as £5billion.

The company is currently paying £270million over a tenyear period but falling yields on long-term investments mean the supermarket giant is facing a larger pension gap than anticipated.

The existing payment schedule, which has been agreed with its pension trustees, would mean it would take about five years longer than previously hoped to cancel out the deficit. New plans could be made once next year’s three-year revaluation of the scheme’s liabilities is complete.

The company is expected to announce on Wednesday that sales have risen for the past three quarters after Tesco’s chief executive Dave Lewis started to turn the business around.

Analysts say the interim profit could increase by 40 per cent to £487million. Its lower-price Farm brands range is said to be delivering rising volumes as sales speed up.

Bruno Monteyne, an analyst at Bernstein, said: ‘Tesco’s large pension deficit will get worse when it announces its latest results. However, we expect that is already well reflected in the current share price.

‘It remains one of the strongest food retailers with solid sales growth, access to the fastest growing convenience and online channels and a well-executed own label strategy.’