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Tesco share price: 4 things we learnt from its Q1 results

The UK’s largest supermarket chain has made a strong start to the new financial year, growing its UK business by both volume and value, but what else did we learn from its latest trading update?

Tesco Source: Bloomberg

Tesco kicked started the new financial year in strong form, with supermarket chain growing its share of the UK market both in terms of volumes and value.

However, its growth internationally has been a mixed bag, with declining sales in Central Europe, while in Asia the supermarket its revenues continue to increase.

Tesco tightens its grip on UK market

In the UK, while the overall grocery market has seen growth subdued, Tesco continues to outperform its rivals in both sales and volume, with revenues up 0.2% and volumes climbing 1.3% in its first three months of trading this year.

Tesco has had success with its online business in particular, with grocery sales up 7% year-on-year and a 10% increase in the number of customers opting to Click & Collect their shopping.

‘We have had a strong start to the year, growing ahead of the UK market on both a volume and value basis,’ Tesco CEO Dave Lewis said.

‘Our customer offer is more competitive than ever, with a wider choice of our 'Exclusively at Tesco' products now available in more stores, helping to drive more than 10% sales growth across the range.’

Booker continues to grow post-merger

Over a year has passed since Tesco finalised its £4 billion takeover of leading food wholesaler Booker, with both businesses benefitting from the merger.

Booker continues to grow well despite lapping exceptionally strong growth last year driven by one-off contract wins.

Booker’s customers are responding positively to the benefits of ‘joining forces’ including our improved offer in fresh food and the launch of over 100 new and exclusive fresh-cut flowers and drinks products, helping to drive total sales growth (on a comparable days basis) of 4.2% excluding tobacco, Tesco said.

Tesco sees sales slide in Central Europe

Despite a strong performance in the UK market, Tesco has struggled to replicate the same sort of form in Central Europe.

Tesco witnessed a decline in sales in Poland, which impacted Central European sales by circa 4%, with significantly cooler weather across the region hurting sales by up to 2%.

Asia sees uptick in sales

In Asia, sales increased by 7.3% at actual rates, while at constant rates its sales performance improved by more than 3% quarter-on-quarter to 2.6%.

Tesco attributed its strong Q1 performance n the region to its stronger customer offer that contributed to a better performance across all formats and categories, with the supermarket chain seeing an increase in market share in Thailand drive by strong growth in Bangkok.

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