Tesco, the world's third-biggest retailer, slipped back to an underlying sales decline at the lower end of expectations in the U.K. in the first quarter, raising doubts about a costly recovery plan for its home market.
The firm, which recorded a fall in profit for the first time in two decades in the year that ended Feb. 23, has spent 1 billion pounds ($1.5 billion) on a fightback plan for its British stores, where it makes about two thirds of revenue and profit.
But it said it had been hampered by weaker demand for its general merchandise products as it reorganizes that part of the business, and by the discovery across Europe of horsemeat in products labelled as beef.Tesco was one of several companies forced to withdraw some goods and apologize to customers.
The result at U.K. stores open over a year, excluding fuel and VAT sales tax, was a 1 percent fall in the 13 weeks to May 25.
That compares with analysts' forecasts of a fall of 0.5 to 1 percent, according to a Reuters poll, and a rise of 0.5 percent in the fourth quarter of the previous financial year, which was Tesco's strongest quarterly outcome in three years.