Tesco’s share price (LON:TSCO) has been subdued in London in today’s session as Britain’s biggest grocer updated investors on its first-quarter performance, posting what it referred to as ‘outperformance in a subdued market’. The company’s results, however, pointed to slower growth in sales during he reported period, along with downbeat performance in Central Europe.
As of 09:02 BST, Tesco’s share price had given up 0.40 percent to 226.60p. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.21 percent higher at 7,383.09 points.
Tesco posts Q1 results
Tesco announced in a statement this morning that like-for-like sales had inched 0.2 percent to £13.98 billion in the 13 weeks ended May 25. At home, the group’s LFL sales rose 0.4 percent, while its wholesale business Booker saw a 3.1-percent rise. Central Europe, however, underperformed, with LFL sales in the region falling 4.9 percent, on account of store closures and two fewer trading days in Poland, along with cooler weather across the region.
“We have had a strong start to the year, growing ahead of the UK market on both a volume and value basis,” Tesco’s chief executive Dave Lewis commented in the statement.
Analysts weigh in
“UK sales were up a meagre 0.4%, short of the 0.8% expected and well below the 1.7-percent from the prior quarter,” said Neil Wilson, chief market analyst at Markets.com, as quoted by Proactive Investors. “Whilst no one thought the Christmas boost would carry through completely into the first quarter, these are mildly disappointing results. The threat from the discounters is not going away.”
The newswire also quoted Richard Hunter, head of markets at Interactive Investor, as commenting that the trading update was ‘unsurprisingly light’ on strategic detail ahead of next week’s Capital Markets Day, but the trading performance showed “positive trends across the board, with the exception of its Central European business”.
According to MarketBeat, Britain’s biggest grocer currently has a consensus ‘buy’ rating, while the average target of Tesco’s share price stands at 279.90p.