Tesco chief executive Philip Clarke has professed himself "disappointed" with the retailer's UK Christmas trading performance.
Announcing the company's Christmas and new year trading statement today (Thursday), Clarke said the company needed to "move faster" to address "long-standing business issues" and improve the shopping trip for its customers.
Group sales in the six weeks to 7 January rose by four per cent excluding petrol, but 2.9 per cent at actual exchange rates. In the UK, sales rose just 1.7 per cent excluding petrol, and although new store space contributed three per cent growth, like-for-like sales growth was "below our expectations and disappointing" at 1.3 per cent.
"We delivered a very good Christmas shopping experience for our customers but in a highly promotional market, the volume response to our increased investment into lowering prices did not offset the deflation it has driven," Clarke admitted. "The wider improvements in the shopping trip that are an integral part of strengthening our performance are still to work through."
Tesco performed better internationally, with sales growing 8.2 per cent, or five per cent at actual exchange rates, while online sales increased by more than 14 per cent.
Clarke predicted Tesco would make "minimal group trading profit growth for the year". "In a challenging consumer environment at home, and with early signs of more cautious consumer behaviour emerging elsewhere, we have seen more strain than anticipated on our profitability during the important seasonal trading period," he added.
"Our plan for 2012-13 now reflects substantially increased investment to deliver an even better shopping trip for customers - particularly in the UK. Consequently, we anticipate minimal group trading profit growth for the year."
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