The retailer said sales were held back by the political turmoil over the country’s plan to leave the European Union.
As reported by Bloomberg, Tesco’s shares fell as much as 3.3% in London early Thursday after it said domestic comparable sales rose at only half the rate analysts expected in the first quarter.
“The subdued nature we talk about is the consumer sentiment, which is weakening in the UK,” chief executive Officer Dave Lewis said on a call with reporters. “Some of that is clearly driven by the political situation.’’
Tesco also suffered from comparisons against a particularly strong period last year, when it benefited from warm weather and a royal wedding. The Booker wholesale division, which has been driving growth, continues to expand but was also held back by a similar effect after securing contract wins last year.
Tesco has used its scale to hold down prices, until now insulating it from the troubles faced by rivals like J Sainsbury, whose bid to combine with Walmart’s Asda was blocked by regulators. The deal would have given the retailers the purchasing heft to rival the market leader.
Tesco said it was still growing more rapidly than the overall UK market as it expands its range of private-label items. But the 0.4% rate in the latest period was a sharp slowdown from the fourth quarter’s 1.7% gain. Until Thursday, Tesco’s shares had climbed 20% so far this year.