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Sales continue to fall at Tesco but rate of decline has slowed under new chief executive

Published:  26 June, 2015

UK sales at Tesco continued to fall in the first quarter of its new financial year - though the decline was less dramatic than during the horror show of 2014/15.

The 13 weeks to May 30 saw a 1.3% drop in value sales, said the company in a trading statement ahead of its AGM later today.

The figure represents a slowing of decline under new chief executive Dave Lewis, brought in from Unilever last year in the wake of the company's accounts scandal.

First quarter UK decline a year ago was 4%, rising as high as 5% in the second quarter of 2014/15.

Group sales were also down 1.3% in Q1 of the current year, against 3.4% in the same period last year.

Lewis said: "We are fixing the fundamentals of shopping to win back customers and relying less on short-term couponing.

"Customers are experiencing better service, better availability and lower, more stable prices and are buying things more often at Tesco.

"While the market is still challenging and volatility is likely to remain a feature of short-term performance, these first quarter results represent another step in the right direction."

Tesco's wine department has seen several redundancies as the result of a restructure this year in and it has set about cutting the number of wines it sells by a third.

Tesco said in the trading update that range reviews across the board are "progressing well" and that they had been completed in 15 categories, resulting in a 20% drop in the number of lines carried.

Ken Odeluga, senior market analyst at City Index said they were "the best Q1 results investors could have hoped for".

He added: "There's certainly room for surprise and a few red faces among City analysts, many of whom had expected Tesco's key UK like-for-like sales to tank by an additional 2%-3%."

The City rumour mill is speculating that the big four supermarkets - Tesco, Sainsbury's, Asda and Morrisons - may embark on a programme of consolidation through mergers in a bid to strengthen their hand against the growth of discounters such as Aldi and Lidl.