Tesco reports slowing sales

Tesco, Britain's biggest retailer, showed it was not immune to UK consumer caution at Christmas, reporting a slowdown in core sales at home while international growth surged.

Finance and strategy director Andrew Higginson joined other retailers in noting greater caution among UK consumers amid rising energy prices and weaker housing markets and called on monetary policy makers to boost confidence with a rate cut.

"The Bank of England does need to move quickly," Mr Higginson said following the central bank's decision last week to hold interest rates steady at 5.50 per cent.

Tesco shares pared early losses of more than 4 per cent to trade down 3.1 per cent yesterday.

Underlying sales at Tesco's UK stores open more than a year rose 3.1 per cent in the six weeks to January 5th, slowing from 4.1 per cent growth in the third quarter and below forecasts of around 4 per cent. International sales grew 26.9 per cent from the 12 countries outside Britain where Tesco operates, with strongest growth in central Europe, Malaysia and Turkey.

Davy Research's food analyst John O'Reilly wrote in a note to investors that the UK's largest food retailer had made no reference to its food sales performance over the critical Christmas period, adding that its overall like-for-like sales growth of 3.1 per cent in the period was "sclerotic" compared to expectation.

Dolmen Stockbrokers described the trading statement as "mixed", noting the strong 26.9 per cent rise in sales in Tesco's international division, which includes its 98 stores in the Republic.

International sales represent a quarter of total group sales at the retailer.