Horsemeat scandal hits Tesco profits

THE HORSEMEAT scandal has hit Tesco, with the supermarket colossus posting a drop in sales in Britain during the past three months. Like-for-like sales dropped by 1 per cent in the second quarter of 2013, with Tesco saying the horsemeat scandal had a "small but discernible impact" on sales of frozen and chilled food at their convenience stores.

The company's chief executive Philip Clarke told Radio 4's Today programme they were planning for the "long term". The supermarket is currently refurbishing stores and plans to refit almost 70 of its biggest outlets.

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"We're not helped by the huge changes we're making to general merchandise, which is all about changing the space and the ranges for the future," he said. "We have dramatically reduced our ambitions to grow big stores."

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Outside the UK, Tesco said like-for-like sales fell by 3.8 per cent in Asia and 5.5 per cent in Europe as the global economic environment remained "difficult" for consumers.

Clarke admitted conditions outside the UK remain challenging, saying "we have broadly maintained our performance from the fourth quarter of last year".

The decline in sales comes after a dismal 18 months for Tesco. In April, Tesco suffered its first drop in annual profits in nearly 20 years, with post-tax profit falling 95.7 per cent to £120m. In March, Tesco acquired the Giraffe restaurant chain as part of its attempts to refresh the business. Last year it was voted Britain's worst supermarket by consumers. Although sales figures for the supermarket improved over Christmas, the company had previously warned that the impact of the horsemeat scandal will affect their profit margins.