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Tesco reports a dip in general merchandise sales in the UK

Tesco has reported that general merchandise sales in the UK, which includes clothing, were down 0.9%.

Like-for-like growth across the whole of general merchandise, which includes electricals as well as clothing, was down 4.8%, compared with a fall of 3.3% in the second half of last year. It said margins have held up “very well”.

General merchandise sales in Europe were strong with clothing sales up by 11%.

Overall the retailer reported a 6.2% rise in underlying pre-tax profit to £1.9bn for the 26 weeks to August 27 with strong growth overseas helping it prop up the “subdued” UK market.

In the UK, overall trading profit was up 4.5%, while growth in Europe was up 11.8% and in Asia up 18.7%. US losses reduced by 23.2% and Tesco said it is on track for a sharp reduction in its full year.

In the UK, like-for-like sales excluding petrol and VAT were down by 0.5%, with a fall of 0.9% in the second quarter. Total sales were up by 3.4% in the first half.

Tesco chief executive Philip Clarke said he was pleased by “excellent growth in Europe and Asia, as well as an encouraging performance in the US” but outlined the “challenges of subdued demand in the UK, particularly in non-food categories”.

In Asia, Tesco reported sales up 11.7%, while in Europe, sales were up 12.4%.

In the US, sales were up 23.1% to £304m and losses reduced to £73m. It said it is on track to break even towards the end of 2012/13. It has also trialled its Friends loyalty card at seven stores and plans a full roll out of the scheme next week.

Tesco will launch an upgraded version of Tesco Direct online in the first half of 2012, which will also include its first phase of its ‘Marketplace’ - enabling customers to buy from selected sellers on Tesco.com.

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