Tesco's falling sales heap pressure on chief executive

UK's largest supermarket faces increasing competition from Aldi, Lidl and Waitrose

A Tesco Extra supermarket
(Image credit: PAUL ELLIS/AFP/Getty Images)

Tesco has reported a fourth consecutive quarter of falling sales, raising questions over the leadership of the supermarket chain's chief executive.

For the first three months of the year, the supermarket announced that sales had dropped 3.8 per cent year on year, excluding fuel and value-added tax.

Embattled chief executive Philip Clarke said he anticipated that trading would remain difficult "throughout the coming quarters", but added that his multi-billion pound program of store revamps would serve to reverse the ailing fortunes of the company.

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"Our accelerated plans are making a real difference for customers and we are more competitive than we have been for many years," Clarke said.

But industry figures show that the supermarket is suffering a sharp decline in its share of the grocery market.

Figures released yesterday by Kantar Worldpanel, the grocery market analysts, showed Tesco's market share had declined to 29 per cent in the quarter to 25 May from 30.5 per cent a year earlier, while sales fell by 3.1 per cent in the same period.

Tesco has faced increasing competition from discount rivals such as Aldi and Lidl and from the higher-end retailers including Waitrose, the BBC said.

David McCarthy, a retail analyst at HSBC, said: "These figures from Kantar are shocking and show that Tesco's … total sales are going backwards despite huge capital and profit and loss investment."

The falling figures will increase pressure on Clarke, "who has struggled to continue a record of growth" achieved by his predecessor Sir Terry Leahy, The Times says.

The results come as Mike Iddon, Tesco's UK finance director, prepares to leave Tesco to join retail company New Look. The departure will generate fears of a "brain drain" that has seen a succession of senior and middle-ranking executives leave the company, the Times says.

Tesco shares, which have fallen by 19 per cent over the course of the last year, slipped by a further 1 per cent to 297.5p this morning.

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