Tesco’s UK performance hit by petrol prices and low food inflation

The grocer said total UK sales including VAT and petrol grew by 6.5%. Like-for-like sales including petrol were up 3.8%. Excluding petrol, like-for-likes were up 1.1%.

Tesco said despite the difficult climate, it continues to see evidence of a steady consumer recovery. It said growth in its Finest range and non-food remained positive in the quarter, and it continues to grow share in sales of TVs as a result of its World Cup campaign.

The number of families redeeming Clubcard points is more than 20% higher than this time last year, said Tesco.

Tesco group sales were up 8.2%. Excluding petrol, sales were up 6.9%.

Total international sales increased by 11.9% at actual exchange rates, excluding petrol, or 5.3% at constant exchange rates.

In Asia, sales are up 15.4% (4.9% at constant exchange rates). Growth was held back temporarily by political uncertainty in Thailand and Korea.

In Europe, sales excluding petrol were up 7.3% (4.3% at constant exchange rates). It said Ireland sales recovery continued, offset by difficulties in some countries such as ongoing economic difficulties in Hungary.

In the US, sales were up 37.8% (40.6% at constant exchange rates), with high single digit like-for-like sales driven by increased customer numbers.

It said international like-for-like sales performance was steady compared with the previous quarter and was broadly flat overall, slightly negative in Asia and slightly positive in Europe.

Tesco chief executive Sir Terry Leahy said: “Tesco has made a solid start to the new financial year. We’re making good progress with our strategy: investing in the shopping trip for customers; driving strong productivity gains; growing space and winning market share. The long-term global recovery is well underway although the pace and strength of economic recovery varies across our markets. We’re in good shape and well-positioned to deliver further growth as the economic environment continues to improve.”

Last week, Leahy announced he will resign in March 2011, and international and IT director Philip Clarke will take over.