Sales slide shows Tesco's recovery stalled

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Sales slide shows Tesco's recovery stalled

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Tesco, which is the world’s third largest retailer, suffered an underlying fall in quarterly sales of one percent in its main market – Britain.

The supermarket group suffered from weak demand for general merchandise as cash-strapped Britons cut back on non-essential purchases in a flagging economy.

That was a resumption of a trend seen for most of the past three years and it raises doubts about the firm’s turnaround plans.

There was also a negative effect from Europe’s horsemeat food contamination scandal.

Retailers across Europe are struggling with subdued consumer spending. Tesco, which gets about two-thirds of its revenues from Britain, has had a harder time than most. That is in part because it sells a higher proportion of non-food goods than its rivals. There is also a problem of years of under-investment that saw it lose ground in Britain to the likes of J Sainsbury and Asda.

Outside the UK, like-for-like sales in Asia fell 3.8 per cent, as Tesco was hit by restrictions on opening hours in South Korea. Its performance also declined in China and Thailand. Like-for-like sales in central Europe fell 5.5 per cent.