Tesco's sales rise as it sees 'consumer recovery'

Tesco has reported a rise in third-quarter sales, saying it is "continuing to see evidence of a steady consumer recovery" in the UK.

Its like-for-like UK sales excluding petrol - which pulls out the impact of new store openings - rose 1.5% in the three months to 27 November.

Tesco's overseas sales growth was stronger, increasing by 4.1% on the same measurement.

The supermarket giant said it was being helped by an improving global economy.

Tesco saw its biggest percentage sales growth in the US, where they rose by 9.8% on a like-for-like basis.

It said this was helped by a "particularly successful" Thanksgiving holiday period, and higher customer numbers.

While the rate of sales growth was stronger overseas, the UK remains by far the most important market for Tesco.

It currently has 2,482 British stores, which compares with 663 outlets in Thailand, its next largest national market.

In the US, Tesco has just 145 branches at present. Poland is its largest market on mainland Europe, with 336 shops.

Like-for-like sales in mainland Europe advanced by 3.6%, while those in Asia added 4.3%.

Tesco's group-wide total sales - which includes stores that have opened during the past year - increased by 8.8%.

Chief executive Terry Leahy said: "Our continued investment in the shopping trip, and our new space opening programme across our markets, are giving us good sales momentum and market share gains."

Analyst Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said there were "some encouraging signs" in Tesco's trading update.

He added: "In particular, the growth in overseas sales continues apace, with promising numbers from Europe, Asia and the US."

However, Mr Hunter said Tesco was continuing to be affected by factors including higher food inflation, and that its share price was still lagging behind the general rise of the FTSE 100.

Shares in Tesco were up 6.5 pence, or 1.6%, to 426.5p in early trading.

Regarding trading in the run up to Christmas, Tesco said it had been affected by the continuing heavy snow in parts of the UK, but said it hoped to recover lost sales in the weeks ahead.

Tesco's trading update came as the British Retail Consortium (BRC) said industry-wide like-for-like retail sales growth had slowed in November.

It said sales were up 0.7% from a year earlier, down from an annual growth figure of 0.8% in October.

The BRC said consumers were restricting their spending due to worries over job security, and concerns about the strength of the wider economy.