Tesco Sales Decline Most in Two Decades as Plight WorsensGabi Thesing
Tesco Plc had the steepest sales decline in more than two decades, researcher Kantar Worldpanel said today, dealing a further blow to the U.K.’s biggest supermarket company a day after it started an investigation into overstated profit guidance.
Revenue declined 4.5 percent in the 12 weeks ended Sept. 14, the steepest drop since comparable records began in 1993, Kantar said in a monthly report on the U.K. grocery industry. The retailer’s share of its domestic market dropped by 1.4 percentage points from a year ago to 28.8 percent.
Today’s figures underscore the scale of the task facing Chief Executive Officer Dave Lewis, who took the helm three weeks ago amid slumping sales and yesterday started a probe after the grocer overstated its first-half profit forecast by 250 million pounds ($409 million). In a further blow to the CEO, Tesco also said today that its South Korean unit is being investigated regarding the handling of customer data.
The grocer’s U.K. sales decline accelerated to 5 percent in the shorter four-week period ended Sept. 14, Citigroup Inc. analysts said in a note, citing Kantar Worldpanel data that is not publicly available.
“There is no sign yet of recovery at Tesco,” Fraser McKevitt, head of retail at Kantar Worldpanel, said in the statement. “Shoppers still have a strong appetite for the discount stores.”
The shares fell after the data was released, extending yesterday’s 12 percent drop. They closed down 4.2 percent at 194.5 pence, the lowest since May 1, 2003.
Tesco is co-operating with a South Korean investigation into the handling of customer data at its Homeplus unit, a spokesman said today by e-mail. Regulators are looking into allegations that Homeplus sold customer data to third parties, Korea Times reported Sept. 19. South Korea is the retailer’s most important international market.
Tesco said today that Alan Stewart will start as chief financial officer immediately, after gaining his early release from Marks & Spencer Group Plc. Stewart is taking up the post more than two months ahead of his scheduled Dec. 1 start date, having been on an enforced period of leave from Marks & Spencer since resigning in July to join Tesco.
“His first task this morning will obviously be to look at Tesco’s accounting practices, but they will need to move on fairly quickly to devise a new strategy to revive the business,” said Bruno Monteyne, an analyst at Sanford C. Bernstein. “The accounts will need to be cleaned up and they will be cleaned up, I have no doubt in my mind about that.”
Kantar’s figures also showed that budget chains Aldi and Lidl are continuing to gain at the expense of traditional U.K. supermarkets. Wal-Mart Stores Inc.’s Asda was the only one of the country’s four main grocers to boost sales in the 12-week period, with J Sainsbury Plc and Wm Morrison Supermarkets Plc both losing revenue and market share, Kantar said.
Aldi’s sales surged 29 percent in the 12-week period, with Lidl revenue gaining 18 percent. The two discounters command a combined 8.3 percent share of the market, up from 6.7 percent a year ago. More than half of all British households now shop at the budget stores, the researcher said last month.
Sainsbury’s 12-week sales fell 1.8 percent, worse than Morrison’s 1.3 percent decline, Kantar said. Sainsbury is due to report second-quarter sales Oct. 1. The shares fell 5.4 percent to 263.8 pence, the lowest since September 2011.