Tesco this morning reported a 1.3% drop in first-quarter UK like-for-likes, a lesser-than-expected decline. Here is what the analysts say.


“It would be premature to say that Dave Lewis has remedied all ills. However, it is clear that his strategy is delivering much needed change. For example, an initial range review across 15 categories has allowed Tesco to reduce the number of lines stocked by 20%, while still maintaining market leading choice.

“Price cuts across key branded staples have been implemented and, as well as making Tesco more competitive, have provided the consumer with a much clearer everyday low price message than some of the previous vouchering and coupon schemes, which have now been largely phased out.

“As positive as all of this is, these are early days in Tesco’s recovery.” Neil Saunders, Conlumino

“Like-for-like performance is still a vast improvement on the worst levels of 2014/15; and with inflation getting sequentially worse in this last quarter, and with the additional price cuts we observed Tesco taking during the quarter, this should be seen as an improvement by Tesco.” Bruno Monteyne, Bernstein

“We believe the modest beat has been driven by broad-based improvements across all formats and categories, particularly fresh foods where sales may be higher. Volume growth in the period was an encouraging 1.4%.

“We are not changing our overall financial expectations for Tesco, forecasting trading profit of £1.175bn incorporating a UK trading margin of 0.5%.” Clive Black, Shore Capital

“Given the poor newsflow on the stock recently, we believe expectations coming into the release were low and expect the sequential improvement to be taken well by the market – we, however, do not expect material changes to consensus on the back of this trading update.” Edouard Aubin, Morgan Stanley

“Although the comps for the remainder of the year are overall similar to the first quarter, if volume momentum continues to build – and lower deflation lends a hand – then the company may be able to beat current expectations.” James Anstead, Barclays