Tesco recorded a “robust” first quarter as UK like-for-like sales declined for the fourth consecutive quarter and it battled struggling economies across the globe. Chief executive Philip Clarke was grilled by the press over the performance this morning.
What is your reaction to this performance?
We have delivered a solid Q1 trading performance. We are experiencing subdued consumer confidence in all our markets. In Asia we’re pretty pleased with improved like-for-likes, we saw a modest improvement in Europe despite continued uncertainty in the Eurozone. In the US, we saw positive sales momentum, we had a soft March but improved in April and May.
In the UK, we were up against tough comparisons with the Royal Wedding last year and held fast against the market growth rate. There’s a substantial amount of work on the way – we have recruited and trained 4,000 new staff who are now working in Extra and superstores. The run up to the Jubilee was our biggest ever sales week outside of Christmas with £1bn of sales, not covered in the figures.
Have you seen any impact from the UK turnaround plan?
We have committed £1bn to the UK and we have spent very little of that so far. The original 200 stores we improved have been trading for 20 weeks and customers are delighted, the 500 further stores we’ve improved have been trading for a couple of weeks.
What is your view of consumer confidence?
Customers do not have any more money than they had this time last year as their real incomes are not growing. Confidence isn’t getting any worse or any better. The great hope would be that fuel prices would come down, it is the main dent in household income.
When do expect to return to like-for-like growth in the UK following the new strategy?
I have no wish to pin myself down now to a precise answer. It’s only a few weeks since we announced the plan but we are gaining momentum.
What do you expect the impact of new legislation in South Korea which enforces closures on two days per month and restrict opening hours to be? Is there any change this may change?
By the end of July all of our more than 100 hypermarkets will have to close, as will our rivals stores. It’s early unhelpful to our biggest business outside the UK and the Korean Chain Association is in regular dialogue with government. There are elections in Korea at the end of the year and it’s very difficult to see that the government will make any changes before a new government is in place in March 2013.
What do you make of couponing activity in the grocery market?
The market is intensely competitive. We said that we would coupon in Q1 and we did. There’s been an unhelpful step up in the market in the last quarter. We played our part in it as we had planned. It’s not the long term solution. It’s about getting the right balance of price, promotions, quality and service. It shows that across the market we are all on the side of the customer.
The market has been rational for a while. People have been regularly running on the coupons. If youi stand by and do nothing then you leave the door open for others as happened in Q4.
How did you find the Jubilee?
It was a strong week on both food and non-food. Didn’t the Britons celebrate? It was extraordinary. We sold 1 million packs of party food and 2 million sausage rolls. Clothing performance has been sensational. If the performance had been included our Q1 results would have been substantially better.
Can we expect the appointment of a UK chief executive?
You are talking to him. Until further notice that will be the case.