Tesco suffers worst decline in grocery sector
TESCO emerged as the biggest loser in the grocery sector over the past three months, despite sales showing signs of recovery, as the supermarket price war and fierce competition continued to take its toll on the troubled retailer.
The company, which stunned the City last month with revelations of a £250m black hole in its accounts, saw sales slump 3.6 per cent in the 12 weeks to 12 October, according to data out yesterday by Kantar Worldpanel.
Its market share fell to 28.8 per cent compared with 30.1 per cent a year ago. But there were signs of hope for Tesco as sales improved from the 4.5 per cent fall recorded in September.
Analysts at HSBC said it would cost Tesco £3bn and “several years of very hard work” to turn itself around.
In a note released yesterday, HSBC’s Dave McCarthy said this would include spending £1.5bn on lowering food prices by five to six per cent and around £500m adding more staff to its shop floor.
“Quality has fallen since 2010 and we anticipate it could require between £500m and £1bn to correct, with more quality control, better ingredients and better purchasing,” he said.
Chief executive Dave Lewis will update investors on the investigation into the £250m error alongside its interim results tomorrow.
The Kantar data showed overall market growth of 0.7 per cent, with like-for-like prices down 0.2 per cent, pushing the grocery market into deflation.
Of the big four, Asda was the winner with sales growth of one per cent. Sales at Morrisons and Sainsbury’s fell 1.8 per cent and 3.1 respectively.
The performance at Sainsbury’s was the worst in more than two decades since Kantar started its records, the firm said.
Among the discounters, Aldi’s growth slowed slightly compared with recent months, but its sales were still up 27.3 per cent. Lidl’s sales grew by 18.1 per cent.