Tesco share price surges as grocer posts second quarter of sales growth

Shares in Tesco (LON:TSCO) have jumped in London this morning after the UK’s biggest supermarket revealed that its sales had climbed for a second quarter in a row, with the group’s recovery continuing in a challenging market. The company, which has been shedding non-core assets to shore up its balance sheet, announced that it had inked a deal to sell its Harris + Hoole coffee shop chain.

As of 09:13 BST, Tesco’s share price had added 1.77 percent to stand at 169.39p, outperforming the benchmark FTSE 100 index which is currently 0.61 percent better off at 6,299.32 points amid expectations that the UK will vote to remain in the European Union in today’s referendum. The grocer’s shares have lost over a fifth of their value over the past year, but have recovered more than 13 percent in the year-to-date.

Tesco announced in a statement this morning that its like-for-like sales had climbed 0.9 percent in the first quarter. The group’s UK LFL sales came in 0.3 percent higher, while the company’s international operations delivered three-percent LFL sales growth, with a positive result in both Asia and Europe for the fourth consecutive quarter.
“We have delivered a second quarter of positive like-for-like sales growth across all parts of the Group in what remains a challenging market with sustained deflation,” the company’s chief executive Dave Lewis said in the statement, adding that the blue-chip grocer was “encouraged by the progress we are making”.
Richard Hunter, head of research at Wilson King Investment Management, told the BBC that Tesco’s boss was “clearly aiming to return the stock to its former status as a market darling, an accolade which has long since disappeared”.
Lewis, who took the helm at the retailer in 2014 amid an accounting scandal, has been looking to revive the supermarket’s fortunes a string of measures, including trimming non-core assets. The company, which recently unveiled the disposals of its Turkish business Kipa, Dobbies Garden Centres and restaurant chain Giraffe, announced today that it had agreed the sale of its coffee chain Harris + Hoole to Caffè Nero.
“Lewis is continuing his strategy of reducing the Tesco debt mountain through the sale of non-core assets such as Giraffe, Dobbies, Kipa and now Harris and Hoole,” John Ibbotson of retail consultants Retail Vision told City A.M. “Keep it simple, quite rightly, is the philosophy now.”
As of 09:28 BST, Thursday, 23 June, Tesco PLC share price is 169.75p.