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This decline was nevertheless marginally better than estimates from Deutsche Bank and Barclays, which had predicted a drop of 1.8%. Tesco’s poor performance was attributed to the UK grocery market.
The world’s third-largest retailer by revenue stated that approximately two-thirds of its profits come from the UK division. However, the company stated that the £1 billion investment it has made in its British division is working, and CEO Philip Clarke stated ‘the plan is very much on track’.
Mr Clarke acknowledged that deep-discount supermarkets like Lidl and Aldi are increasing their market share, but reiterated that Tesco will not slash prices to compete with them even though some investors have called for this.
Tesco’s share price suffered in October when the firm issued a profit warning, and the announcement today that third quarter LFL sales in Asia and Europe dropped by 5.1% and 4% respectively is not helping investor confidence.