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Tesco sees 'challenging' trading Tesco sees 'challenging' trading
(about 2 hours later)
Supermarket giant Tesco has reported sales growth in line with expectations for the key Christmas period but said trading conditions were "challenging". Supermarket giant Tesco has reported sales growth in line with expectations for the key Christmas period, but said trading conditions were "challenging".
Like-for-like UK sales, excluding petrol and new store sales, increased by 2.5% in the seven weeks to 10 January, it said in a trading update.Like-for-like UK sales, excluding petrol and new store sales, increased by 2.5% in the seven weeks to 10 January, it said in a trading update.
Total group sales rose by 11.6% during the period, helped by overseas growth.Total group sales rose by 11.6% during the period, helped by overseas growth.
The economic slowdown is forcing consumers to cut their spending, notably on non-essential goods.The economic slowdown is forcing consumers to cut their spending, notably on non-essential goods.
A survey of the UK economy, released on Tuesday by the British Chambers of Commerce (BCC) suggested there had been a "frightening deterioration" in the UK economy towards the end of 2008.A survey of the UK economy, released on Tuesday by the British Chambers of Commerce (BCC) suggested there had been a "frightening deterioration" in the UK economy towards the end of 2008.
However, while Tesco's UK like-for-like sales growth was the slowest since the early 1990s, Sainsbury's reported last week that it had enjoyed its "best ever Christmas" with sales up 4.5%. However, while Tesco's UK like-for-like sales growth was the slowest since the early 1990s, Sainsbury's reported last week that it had enjoyed its "best ever Christmas", with sales up 4.5%.
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "Tesco, once the darling of the sector in analysts' eyes, has somewhat fallen out of favour of late and this update is unlikely to reverse the trend."
The figure "will possibly be dwarfed by Morrison's number next week. The aggressive nature of cost cutting by its competitors is clearly giving Tesco food for thought at the current time," he added.
Overseas growthOverseas growth
Tesco, which operates in 13 countries, said its performance had been "against the background of challenging trading conditions in all of our markets caused by the global economic slowdown".Tesco, which operates in 13 countries, said its performance had been "against the background of challenging trading conditions in all of our markets caused by the global economic slowdown".
The latest figures come after the supermarket saw UK sales growth of 2% in the 13 weeks to 22 November.The latest figures come after the supermarket saw UK sales growth of 2% in the 13 weeks to 22 November.
While UK trading conditions remain difficult, the firm has benefitted from international sales, which were up by 32.7%. While UK trading conditions remain difficult, the firm has benefited from international sales, which were up by 32.7%.
Sales in Asia were especially strong, up 43%, while European sales grew 24%.Sales in Asia were especially strong, up 43%, while European sales grew 24%.
Meanwhile the supermarket described online sales as "very strong" in the run-up to Christmas, with tesco.com and Tesco Direct seeing total combined sales up 18% at £273m. The supermarket described online sales as "very strong" in the run-up to Christmas, with tesco.com and Tesco Direct seeing total combined sales up 18% at £273m.
Shares in the firm were up 2.6% in morning trade at 359.4 pence.