Tesco (LON: TSCO) reported that its sales generally remained steady in the three months leading up to May and warned of a “very difficult market situation” as customers battle with high inflation.
Comparable sales increased by 2.0 percent year on year and 9.9 percent year on year in the quarter preceding the pandemic.When adjusted for the current inflation rate of 9%, both time periods show a significant decrease in sales quantities.
However, the largest grocery store chain in the United Kingdom was able to gain market share, indicating that the long era of ceding it to German discounters Aldi and Lidl may be coming to an end. Tesco reported that its market share increased by 37 basis points over the last year and 11 basis points annually. Because of this, it kept its guide the same for the whole year, while more and more stores have had to cut theirs in recent weeks.
The company’s year-over-year performance was hampered by an extraordinarily strong quarter in the prior year’s comparable quarter. However, base effects were not the only factor at play.
“It’s hard to separate the big effects of last year’s lockdowns that overlapped,” said CEO Ken Murphy in a statement, “from the early signs of changing customer behaviour because of inflation.”
