Tesco’s Weakening Share Raises Concern Ahead of Sales Report

Tesco Plc’s three-month sales and market share fell the most in at least two decades, according to research published today, adding to investor concern ahead of tomorrow’s quarterly report from the U.K. grocery leader.

The supermarket company’s share of its domestic market fell 1.5 percentage points to 29 percent in the 12 weeks ended May 25, the biggest decline since records began in 1994, Kantar Worldpanel said in a statement today. Its sales in that period dropped 3.1 percent, also a record, the researcher said.

Tesco may tomorrow report its worst quarterly U.K. sales performance in more than a decade, according to a survey of analysts conducted by Bloomberg News. The grocer is losing ground to discounters Aldi and Lidl, as well as the upscale Waitrose chain. Its biggest domestic rival, Wal-Mart Stores Inc.’s Asda, is also fighting back, today’s figures show.

Kantar’s figures “suggest some downside risk” to estimates for Tesco’s first-quarter sales, said Andrew Gwynn, an analyst at Exane BNP Paribas. Sales at U.K. stores open at least a year fell 4 percent, excluding gasoline, according to the average estimate of 14 analysts surveyed by Bloomberg News.

In the four-week period ended May 25, Tesco sales fell 3.2 percent, according to Citigroup Inc. analyst Pradeep Pratti, who cited Kantar Worldpanel figures that aren’t publicly available. Tesco slid as much as 1.7 percent in London trading and was down 1.3 percent at 296.55 pence as of 1:12 p.m.

Asda Revival

Kantar’s figures also showed a slowdown in grocery market growth to 1.7 percent, the slowest pace in at least 11 years.

Asda was the only one of the U.K.’s four biggest grocers to increase its share year-on-year, the researcher said. The Wal-Mart unit lowered prices in November, three months before Tesco said it would invest 200 million pounds ($335 million) a year in permanent cuts to prices on everyday items.

Asda’s three-month sales rose 2.4 percent, lifting the chain’s share of the market to 17.1 percent from 17 percent a year earlier. J Sainsbury Plc recorded sales growth of 0.9 percent, though its market share fell to 16.5 percent from 16.7 percent a year earlier, the figures show.

Wm Morrison Supermarkets Plc, the smallest of the U.K.’s big four grocers, continued to struggle, with sales dropping 3.9 percent and market share declining to 10.9 percent from 11.6 percent a year earlier, according to Kantar.

Aldi and Lidl’s combined share of the market is now 8.3 percent, up from 6.5 percent a year ago.

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