Tesco sales edge lower as ‘uncertain backdrop’ weighs on shoppers

Tesco experienced a slowdown in sales growth during the first half of this year, as the UK's largest supermarket attributed the decline to an "uncertain external backdrop" affecting shoppers. The company's like-for-like sales growth slowed to 0.9 percent in the second quarter, down from the previous quarter's lower-than-expected one percent growth.

Tesco maintains a commanding 27.8 percent share of the UK grocery market, but its growth has faltered this year compared to last year's 4.6 and 4 percent sales growth in the first two quarters.

CEO Ken Murphy emphasized the company's focus on providing customers with the best value for money, amid concerns that the Iran war could lead to soaring food prices. In a shareholder meeting, Murphy stated, "Against an uncertain external backdrop, we have continued to invest in giving customers the very best value for money." Over the first half of this year, the supermarket generated £37.4 million in revenue, surpassing analysts' expectations of £37.2 million. Pre-tax profit saw an 11.5 percent increase to £1.5 billion.

Tesco is reportedly considering divesting its operations in Hungary, the Czech Republic, and Slovakia, which constitute the final remnants of the grocer's once-extensive global presence. Murphy did not comment on the rumors but highlighted a 38 percent jump in operating profit across the company's central Europe arm, reaching £63 million.

This growth was attributed to volume growth, targeted promotions, and better buying, supported by a strong contribution from the Save to Invest program, which helped offset the impact of cost increases and a more competitive market landscape.