The world's third-largest retailer by sales after U.S.-based Wal-Mart Stores Inc. (WMT) and France's Carrefour SA (CA.FR) said total international sales grew 15.2% in the 13 weeks to Nov. 27, spurred by strong growth in Asia, while sales growth in the U.K. slipped to 4.9%, down from growth of 5.3% in the second quarter.
Tesco's U.K. operations generate two thirds of sales and most of its profits, and comparable sales growth including VAT but excluding fuel is increasing slowly but steadily, to 1.5% in the third quarter from 1.3% in the second and 1.1% in the first.
Supermarkets may have weathered the worst of the downturn better than speciality retailers, but the boost from inflation seen last year has diminished through 2010 and growth is now more accurately reflecting a cautious consumer environment.
McIlwee said the company ended the third quarter with comparable sales growth, which includes VAT but excludes fuel, of 3% and he expects fourth quarter same-store sales growth to be ahead of the third quarter. Tesco's full year guidance is for U.K. comparable sales growth of 3%.
McIlwee said U.K. food inflation fell slightly in the third quarter. He added inflation is likely to end the year at around 1.5% and although there are a lot of factors involved, a similar level for next year is "not a bad assumption".
Chief Executive Terry Leahy said, "As the global economic recovery gathers pace, our broad-based strategy, combined with our ongoing focus on productivity savings, is enabling us to maintain growth in a sustainable, profitable way."
Tesco's shares closed Monday at 420p. For the latest updates PRESS CTR + D or visit Stock Market news Today
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