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View the article online at http://citywire.co.uk/wealth-manager/article/a754625

Tesco sales slump as retailer is branded a 'sinking ship'

by James Phillipps on Jun 04, 2014 at 08:04

Tesco sales slump as retailer is branded a 'sinking ship'

Tesco remains in decline with like for like sales falling by 3.7% in the first quarter, the supermarket chain’s worst numbers under chief executive Philip Clarke.

This has prompted one analyst to brand the firm a ‘sinking ship’ after the group's £200 million price cutting drive failed to bear fruit.

The retailer is also currently on a drive to update its stores, around 100 of which have so far been modernised in a bid to turn round performance, which it said has improved, but at a group level sales remain weak down 0.9% year-on-year.

‘As expected, the acceleration of our plans is impacting our near-term sales performance,’ the group told the stock market in a statement.

‘The first quarter has also seen a continuation of the challenging consumer trends in the UK, reflecting still subdued levels of spending in addition to the more structural changes taking place across the retail industry.

‘We are determined to lead in this period of change, building long-term customer loyalty and positioning the business to win in the multichannel era.’

The weak sales data announced today follows on from industry research published yesterday by Kantar Worldpanel, which revealed that Tesco’s market share is in steady decline and has fallen from 30.5% to 29.5% over the past 12 months. The biggest winners of new customers have been the discount supermarket chains, such as Aldi and Netto.

Tesco is trying to take these on through its ‘Fuelsave’ promotion, which it said has ‘already helped well over five million customers’, saving them 7p a litre of petrol.

But analysts Retail Remedy Clarke’s strategy, saying: ‘For every hole that [he] patches up, another leak springs. The chief executive’s optimistic talk of building long-term loyalty can’t hide the fact that by the key yardstick- like for like sales- the good ship Tesco continues to sink’.

4 comments so far. Why not have your say?

Pagan Rites

Jun 04, 2014 at 08:46

Aside of all the city jargon lets cut to the chase - the shelves are poorly stocked with empty shelves the norm notwithstanding the mess in some aisles left by your average 2 up 2 down shopper( yes i am a snob and a waitrose one at that), the staff are either non existent or totally uninterested in helping shoppers, overall its not a pleasant experience certainly not worthy of a few pence off your fuel. If its standard fare you are after you might get lucky but move away from the pie and mash supper and you wont find the ingredients in a Tesco. Thousands must agree hence the failings and tarting up the store is like painting your dustbin but inside it, it still stinks with the same old rubbish.

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A C Wiltshire

Jun 06, 2014 at 01:09

Not just a sinking ship. You can see the life boats heading elsewhere in increasing numbers.

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Voodoo Bean

Jun 19, 2014 at 03:09

Where's the loyalty for the hard working shop floor staff? Managers and team leaders are about to lose their jobs in September because of CEOs and the greed of shareholders, when does 3.1 billion underlying profit before tax become not enough ! mistakes like fresh and easy was there biggest mistake, America is americanised, Americans are loyal to American products not outsiders, now Tesco has been cutting back for years , not from the top but at the bottom of the ladder and just like a stack of cards you can take the top cards off and the cards will still stand, but take them from the bottom and the whole structure will fall , there is no shop floor staff , no checkout staff , not enough fillers so the shelfs are empty and the only kpi's store are interested in is 1 in front a out dated promise to the customer, and dot.com and what little staff is left is taken to sit on a till where there was once plenty of checkout staff and what is left is taken to pick for dot com . R.I.P Tesco you have lost your way as a family business , greed and shareholders have all but killed you off

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Voodoo Bean

Jun 19, 2014 at 03:20

When people like terry lee and ken Morrison , starts to moan about the CEOs in charge of Tesco and morrisons and the fat cats are arguing between them selfs then you know these businesses are doomed. It won't be the share holders or the idiots in charge that will suffer it is the shop floor staff , team leaders and managers that have worked all hours and worked hard to try and keep up with the cut backs and job losses, that will suffer first, by losing their jobs, but as I say if you take from the bottom eventually the top will fall it just takes them a little longer to fall. This country has become the capitalistic country of sheer greed and profit fir shareholders and these big company's have reach saturation point of no return. If you do not give the working man a disposable income then where is your profit going to be made from ?

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