
Excluding the Booker wholesale unit, which the grocer acquired this year, Tesco’s UK same-store sales rose 2.1% in the 13 weeks ended May 26, the country’s biggest retailer said in a statement Friday. That beat analysts’ estimates for growth of 1.9%.
“Our growth plans are on track and we are pleased with the momentum in the business,” Chief Executive Officer Dave Lewis said. “We are delighted with initial progress on Booker, and are focused on delivering the synergy benefits that our merger brings.”
In just under four years, Lewis has taken Tesco from a company in disarray to one of the industry’s most reliable performers by cutting prices and slashing costs. Now that Tesco and the UK’s other large grocers have weathered the worst of the threat from discounters Aldi and Lidl, they’re aiming to shore up their positions through mergers and acquisitions. If regulators clear J Sainsbury Plc’s $10 billion acquisition of Walmart Inc.’s Asda, it will likely see Tesco lose its crown as the UK’s biggest retailer for the first time in more than 20 years.
Booker’s like-for-like sales grew 14.3% in the first quarter as the wholesaler won new contracts. Tesco has begun stocking the 30 top-selling Booker lines in more than 50 stores, after good results from an initial trial of two outlets.
Tesco’s grocery home-shopping business performed strongly, with transactions and basket sizes growing during the quarter, the company said. The grocer also said it cut prices on items in its fresh-food range.