The UK’s biggest supermarket by sales and market share reports sales at UK stores, excluding income from petrol and VAT, rose by just 0.5 per cent in its fourth quarter compared with an uplift of 1.8 per cent in the six weeks to Christmas.
The impact of the horsemeat scandal was played down with any drag on sales dismissed as short-term and confined to the frozen meat category.
Tesco will have been hoping to continue the momentum built up over the Christmas period, which prompted chief executive Philip Clarke to declare the retailer was “back on form”.
The supermarket has been battling hard to reverse several consecutive quarterly sales falls, unveiling several marketing-led initiatives over the past 12 months.
It says changes to its advertising introduced by W+K, which has seen a series of playful spots, are helping to improve perception. Without citing sources, it claims the agency’s first festive campaign led to a 7 per cent improvement in “key advertising measures”, while customer feedback showed the activity “created standout and differentiation, putting a warmer and more engaging face to the brand that was welcomed by all”.
Millions have been invested in revamping 300 stores in the hope of improving customer experience. It is also likely recent acquisitions coffee chain Harris + Hoole and child -friendly restaurant Giraffe will be integrated in-stores.
Last month, the supermarket unveiled coupon-at-till scheme Price Promise, which compares the cost of branded and own-label goods with big four rivals Asda, Sainsbury’s and Morrisons. Its introduction has proven controversial with the latter two claiming the comparisons are misleading.
Pre-tax profit fell 51 per cent to £1.96bn in the year to 23 February. The slump, the first annual profit fall the supermarket has reported in 20 years, was caused by a £1.2bn one-off winding up charge from its decision to exit the US and close 199 Fresh and Easy stores. It also incurred a £804m charge for its decision not to build on land acquired during last decade’s property boom.
Marketing notables from Tesco’s financial year
- Online grocery sales up 2.8 per cent to £2.3bn
- 32 million “highly-personalised” Clubcard mailings sent
- Sales of Everyday Value, relaunched last year, up 6 per cent
- 60 per cent of its food range is now differentiated by socio-demographic groupings across all stores