Growth abroad boosts Tesco sales

Solid growth from international operations helped Tesco report a 10.3 per cent increase in third-quarter sales.

The UK's leading supermarket chain, which last month admitted that talks about setting up a joint venture with India's Bharti Enterprises had ended, plans to accelerate its overseas expansion in the second half with the opening of 300 new stores. This will bring the international sales space to a total of 41.8 million sq m (450 million square feet), and the total number of stores abroad to 1,249.

In the 13 weeks to November 25th, Tesco's international sales rose by 17.9 per cent at constant exchange rates and 17.5 per cent at actual rates. That helped to offset slower growth at its home market in the UK, where sales went up by only 7.4 per cent because of falling petrol prices.

Meanwhile, Woolworths yesterday warned that sales could be disappointing in the weeks leading up to Christmas, a move that could reignite calls from shareholders to break up the toys-to-sweets UK retail group.

It said that overall like-for-like sales for the 18 weeks to December 2nd were down by 6.5 per cent.

It said the key Christmas trading weeks would determine the final outcome for the year.

"Given that Christmas falls on a Monday this year, there will be an extra weekend for shopping, which may result in retail sales falling later than usual," Woolworths said in a statement.

"However, given the sales performance of the last two months, it is appropriate to be cautious."

In September, the group came under pressure from leading shareholders, including Baugur, the acquisitive Icelandic investor, to break up its retail and entertainment divisions.

At the time, Trevor Bish-Jones, Woolworths' chief executive, said he needed to win more accounts and bulk up the group's CD, DVD and book distribution operations before he would consider any spin-offs.