Foreign stores boost Tesco sales

TESCO has reinforced its position as Britain's foremost supermarkets operator as it unveiled sparkling third-quarter figures and a confident message on strategy. For the 14 weeks to 17 November, British sales rose 6.4%, excluding the impact of new space and price changes. This compares to recent data from Sainsbury's and Safeway showing underlying growth of 6% at best.

Tesco claims its sales numbers have been affected by deflation of 1% and that actual volume growth was 7.4%. Other supermarket chains have been experiencing price rises but they are expected to follow Tesco next year.

Group sales rose 12.2%, driven by the strong performance in Britain, an increasing contribution from non-food products, the rapid growth of Tesco's overseas business and the company's developing retail services division.

Total sales in Britain were 9.2% higher than last year while international sales surged 34%. The group opens its 100th hypermarket-next week and expects to have more space overseas than in this country by the end of 2003.

'These are very strong figures and better than the market was expecting. Tesco is growing three times faster than France's leading supermarket chain, Carrefour, and it is doing better than Sainsbury's over here, even though Sainsbury's is working off far weaker comparators,' said one analyst.

Tesco is well set up for Christmas and expects strong trading but growth may not be as high as the just over 6% achieved last year. Chief executive Terry Leahy warned last August that second-half growth may not be as high as in the first half as the entire food retailing sector is expecting to come under increased pressure over the next few months.

The City still expects Tesco to produce full-year profits of more than £1.2bn.

Desginer label sale

TESCO is to sell £70m worth of cut- price designer sportswear and fitness equipment at up to a third off recommended prices. Last week the supermarket chain was prevented from selling cheap Levi jeans after a European court ruled it was unfair to import them from the US.

Tesco said it will sell cheap Nike, Adidas and Umbro products in a move that could trigger a price war. Tesco said it is not breaking the law because it has bought the goods on the 'grey market' within Europe which allows retailers to acquire surplus designer goods.