Tesco’s woes continue as sales decline deepens

Tesco’s woes continue to grow as new data reveals the company’s UK sales decline widened in the last quarter, making it the worst performing supermarket in the sector.

Latest Kantar Worldpanel figures mark out Tesco as the worst performing retailer in the last quarter.

Tesco’s sales were down 4.5 per cent year on year in the 12 weeks to 14 September, according to the latest Kantar Worldpanel data. That widens the 3.8 per cent decline reported in the previous quarter and means its market share has now fallen to 28.8 per cent.

The latest negative sales data comes just a day after Tesco admitted it had overstated its profits by £250m. The uncovering of the accounting error has led to four of its executives being suspended, with multichannel director Robin Terrell stepping up to lead the UK business as interim managing director.

Tesco’s share price was down 3.5 per cent to 195.77p at the time of writing, having already suffered a dramatic plunge yesterday (22 September) when the news first emerged about the profit overstatement, wiping more than £2bn from the company’s market value.

Tesco’s performance was in marked contrast to Asda, which was the best performing supermarket of the big four in the last quarter. It was the only one of the major grocers to increase its market share – from 17.3 per cent last year to 17.4 per cent – and recorded a 0.8 per cent uplift in sales year on year.

Last month Asda hailed its price transparency and consistent messaging for helping it outperform rivals in the quarter ending 30 June.

The discounters continued their run of double digit growth in the quarter. Aldi increased sales by 29.1 per cent year on year, moving its share of the sector from 3.7 per cent in 2013 to 4.8 per cent in the last quarter.

Meanwhile, Lidl posted a 17.7 per cent uplift in sales, moving its share up from 3 per cent to 3.5 per cent.

Waitrose also continued its strong run of form. Sales rose 4.5 per cent, helping it pull away from Aldi in terms of share to 5.1 per cent. In the previous quarter Aldi had been poised to overtake Waitrose to become the sixth largest grocery retailer in the UK when their market shares were at 4.9 per cent and 4.8 per cent respectively.

Elsewhere, Sainsbury’s and Morrisons’ continued focuses on value and prices failed to turnaround either of their sales declines into increases.

Sainsbury’s, the UK’s third biggest grocer, reported a 1.8 per cent drop in sales, with its market share declining 0.1 percentage points year on year to 16.2 per cent.

Morrisons’ sales fell 1.3 per cent, with its market share at 10.9 per cent, down from 11.1 per cent in the year ago quarter. However, this was an improvement on the 3.8 per cent sales drop recorded in the previous quarter.

Consumers are benefiting from the intense price competition between the grocers, with the average basket of everyday goods costing exactly the same as it did a year ago for the first time ever.  As a result, the grocery market is currently growing by just 0.3 per cent, the lowest level since Kantar first started compiling its market data in 1993.

Grocery inflation marked its twelfth successfive fall in the quarter and stood at 0 per cent in the period. This is another record low, which Kantar says reflects the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in major categories such as bread, milk and vegetables.