Economic gloom fails to dent Tesco growth

SUPERMARKET giant Tesco has recorded increasing sales and customer numbers despite the "challenging" market conditions.

The company, headed by chief executive Sir Terry Leahy, said UK like-for-like sales excluding petrol increased by 2.5 per cent in the seven weeks to January 10, with total group sales up by 11.6 per cent.

The performance was in line with expectations but sales growth was less than half the level recorded by rival Sainsbury's, which last week said it had enjoyed its best ever Christmas trading performance.

It has also faced strong competition from budget chains, with Aldi today revealing that it has seen UK sales grow by 25 per cent to £2.15 billion in the last year. And the German chain said half of its UK customer base was from the ABC1 social category – up from a fifth seven years ago.

In a statement updating the market on its current trading, Tesco said: "The Tesco Group has delivered a strong performance and record sales over the Christmas and New Year period.

"Group sales increased by 11.6 per cent during the seven weeks to January 10, 2009, driven by continued rapid international expansion and steady growth in the UK.

"This growth is against the background of challenging trading conditions in all of our markets caused by the global economic slowdown."

Finance director Andrew Higginson indicated that the chain's budget range – brought in to compete with the offering of stores like Aldi and Lidl – had impacted on the company's performance. But he added: "In a price sense we are very competitive in the market now . . . so we are happy with our position."

Tesco completed the acquisition of Royal Bank of Scotland's 50 per cent share in Tesco Personal Finance last month and is to set up the headquarters for the expanding part of the business at the Interpoint office development at Haymarket in Edinburgh.

It said customer response to the Tesco Personal Finance offering has been "very encouraging", with over 1000 new accounts being opened per day recently.

It also said non-food sales had strengthened compared to the third quarter of its year with positive like-for-like growth.

Tesco also said that its store opening programme would create 10,000 jobs this year – at a time when thousands of jobs a day are being put at risk by retail firms falling into administration.

It was also revealed today that Morrisons will be creating 5000 new retail jobs this year and Sainsbury's said last week it would also add 5000 new positions.

Tesco's overall sales increase was helped by its continuing global expansion, with international sales up 32.7 per cent.

And the company said that its Fresh & Easy stores in the United States had "coped well" with double-digit like-for-like growth.