'Solid' Tesco sees sales pick up

Tesco has relaunched its Clubcard loyalty scheme

Supermarket chain Tesco says it has made a "solid" start to its financial year, with first quarter like-for-like sales up 4.3% in the UK.

The sales rise was better than the 3.7% growth Tesco saw in the previous quarter, but was lower than growth reported by other supermarket chains.

Tesco boss Terry Leahy said the firm was maintaining strong "momentum in a challenging economic climate".

The firm added there had been a strong response to its relaunched Clubcard.

'Unusually upbeat'

In overseas markets, sales growth in Asia was 43.8%, helped by favourable exchange rates, and in the US sales were up by 174%.

Tesco also said it was pleased by the performance of last year's acquisitions - Tesco Personal Finance in the UK, which was previously run by Royal Bank of Scotland, and Homever stores in Korea.

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, said: "Its international businesses in particular continue to bolster overall performance, contributing a 20% rise in sales over the period.

"Asian sales growth was particularly strong, whilst the US business also saw an exponential improvement.

"Back in the UK, there has been a strong response to the relaunch of the Clubcard scheme, whilst the accompanying management statement was unusually upbeat given the current environment."

UK rivals

However, Tesco's UK sales growth for the three months to 30 May was behind that of competitor Morrisons, which recently reported a 7.3% rise in first quarter sales.

And in May, Asda, the UK supermarket owned by Wal-Mart, saw its quarterly like-for-like sales grow by 8.4%.

In April, Tesco reported underlying annual pre-tax profits of £3.13bn, an improvement of 10% on the previous year, and the highest on record for a UK retailer.

At that time it said its sales topped £1bn a week for the first time, with group sales coming in at £59.4bn.