Tesco recovery hit by horse meat scandal sales dip
Supermarket giant Tesco has been forced to defend its £1bn turnaround plans after UK sales dropped amid further fall-out from the horsemeat scandal.
The group, which today opens a new store in Newry, posted a 1% fall in UK like-for-like sales in its first quarter, raising questions over the progress of its recovery plans.
It said the horsemeat crisis added to sales woes in its general merchandise division, which have been acting as a drag on wider performance.
Tesco said it saw a slump in demand for frozen and chilled convenience food in the three months to May 25 after it was forced to withdraw four beef products found to contain horse DNA.
The first-quarter sales slide marks a reversal in recent improvements, following a 0.5% bounce in sales at the end of its financial year.
Its international business also suffered in the quarter to May 25, with sales falling across Asia and Europe.
The results will heap pressure on chief executive Philip Clarke after he reported the group's first annual profits fall in nearly 20 years, down 51.5% to £1.96bn.
Mr Clarke insisted Tesco's turnaround was on track and promised a relaunch of its non-food ranges, starting in smaller stores followed by a company-wide overhaul later in the year.
Tesco said the horse meat impact was "well behind it now" after completing nearly 1,500 tests on its own-brand meat ranges and finding new suppliers for the four products affected, which have since been relaunched.