Tesco UK sales decline slows as supermarket beats expectations

Supermarket giant Tesco reported that their sales fell less than in previous quarters in a trading update for the 13 weeks to 30 May 2015.

In the first quarter of the company's 2015-16 financial year, its like-for-like sales dropped by 1.3%, compared to 4.4%.

Chief executive Dave Lewis said that the company is still finalising improvements to its business in order to boost sales and customer satisfaction in the long term.

He said: "Whilst the market is still challenging and volatility is likely to remain a feature of short-term performance, these first quarter results represent another step in the right direction."

Although the fall in sales are less severe than in the company's 2015-14 fiscal year, Tesco is still struggling in many of its divisions, as shown by its Republic of Ireland revenue, which dropped 4.4%.

Analysts at Accendo Markets said that the 1.4% increase in sales volume reported by the supermarket indicated steps towards recovery.

"While the sector price war continues, higher volumes in the first quarter ... imply internal issues being resolved and its own price cuts paying off, a combination which could help the UK's leading grocer begin to claw back some of the market share lost to the hitherto successful discounters."

The company reported a like-for-like rise in Central Europe and Turkey sales of 2.2%, but it was the only division in which sales grew and stood against a stark 3.0% fall in its Asia division.

Tesco has suffered from the supermarket price war, which sees the Big Four supermarkets in the UK slashing prices in order to compete with budget giants Aldi and Lidl, causing food prices to fall significantly. The company's share price has fallen by more than 36% since June 2013.