Tesco specifically drew attention to sales of general merchandise and clothing
Tesco (LON:TSCO) saw its underlying UK sales growth slow during Q1, in contrast to the same period a year ago when many rushed to the supermarket to bolster their supplies for the first lockdown.
For the quarter ending in May, the company’s sales rose by 0.5%, above analysts’ predictions of a drop of 1%. However, it was way down from a growth rate of 8.8% in the quarter before.
Tesco said that people were eating more meals at home than before the pandemic, causing a growth in sales.
Fuel sales rose by 68.1% in a signal of a recovery as the vaccine roll-out continues apace in the UK.
However, with total fuel sales at £1.4bn for the quarter, sales are 15.2% below their level before the pandemic.
Tesco specifically drew attention to its sales of general merchandise and clothing, as like-for-like sales jumped by 10.3% and 52.1% year-on-year respectively.
Tesco also retained its profit guidance for the 2021/22 fiscal year.
Chris Beckett, head of equity research at Quilter Cheviot commented on the FTSE 100 company’s trading statement:
“Tesco continued its growth trajectory in the first quarter of the year, despite the comparison being made with a truly exceptional period a year ago when there was widespread panic buying at the start of the first lockdown,” said Beckett.
“Sales are 9% ahead compared to pre-pandemic 2019 levels, but this measure has declined in the last two months as restrictions have eased and consumers can go back out to buy food in restaurants and elsewhere. This could well imply that current trading is negative, and Tesco executives will no doubt be grilled on this point during the investor call today.”
“The boom in online food delivery shows no sign of slowing, with sales up 22% year-on-year and up a staggering 82% since the start of the pandemic. The growth of online delivery is a structural trend accelerated by Covid, but one that is here to stay. Consumers value the convenience of online shopping and it’s clear they are sticking with it.”
In early morning trading the Tesco share price is down 1.8% to 227p.
