Tesco gets boost as sales defy expectations ahead of AGM

Embattled supermarket group Tesco has received a much needed boost ahead of its potentially rancorous annual meeting later today, with its reported first quarter sales significantly ahead of analyst expectations.

In a trading update published to the market this morning, the group reported a decline in like-for-like sales in the UK of 1.3 per cent for the three months to the end of May, an improvement on the decline of 1.7 per cent in the preceding period and well ahead of declines last year, which were in excess of five per cent. Consensus among analysts had been for a 2.5 per cent decline.

The results will be a boost for new chief executive Dave Lewis, who The Guardian says will face criticism at the annual general meeting over his own pay, in particular a £3.25m 'golden hello' and a bonus structure that could be worth up to five times his £1.25m salary. A further £2.2m in bonuses are expected to be paid to previous CEO Philip Clarke and financial director Laurie McIlwee, who have been tainted by a £263m accounting scandal.

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Analysts told the The Grocer that the results are likely to quell anger over Lewis's contract, but there is still likely to be unrest catalysed by shareholder action group Pirc over the payments to the departed executives. John Ibbotson of Retail Vision told the magazine: "By all means go after the golden goodbyes awarded to Clarke and McIlwee, but any investor complaints about Dave Lewis' golden hello are likely to fade after these numbers."

Tesco said the results were particularly pleasing as they came despite the headwinds of a deflationary environment and reduced coupon incentives. It added that figures show it has added 180,000 new customers over the past three months, with transaction volumes up 1.4 per cent.