LONDON: Higher inflation helped sales growth pick up at Tesco at the start of the year, but the company said its efforts to limit the impact of cost increases in “tough market conditions” were helping it maintain momentum in its efforts to win back customers.
Tesco reported its first UK like-for-like sales growth for seven years in 2016, and it continued that trend in the first quarter of this year, with growth increasing to 2.3 per cent compared to the same quarter last year.
Rising prices have helped sales grow across the UK grocery sector in recent months, with Kantar Worldpanel’s most recent survey of the industry showing sales rising at their fastest rate in three and a half years.
Tesco said it is “working with our supplier partners to protect customers from inflationary pressures”, and improving its prices relative to competitors.
There were signs those efforts were paying off, with the company reporting particularly strong volume growth in fresh food, with a 1.6 per cent year on year increase described as a “significant market outperformance”.
Tesco, the UK’s largest supermarket chain, has been working to turn itself around and win back market share after a difficult period that culminated with one of the biggest losses in UK corporate history in 2015.
It also benefited from the resolution of tax issues relating to the 2015 sale of its Korean business. The company had set aside £329m in provisions to pay further capital gains taxes, which the company said can now be released as no more tax will need to be paid.