Tesco UK sales growth slows, international strong

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LONDON, Oct 2 (Reuters) Tesco, the world's third largest retailer, reported a slowdown in growth in its core British market in the half year, but total sales in its international business grew by 23.1 percent.

Sales excluding fuel at Tesco's UK stores open at least a year rose 3.5 percent in the 26 weeks to Aug. 25, exceeding analysts' expectations.

Analysts polled by Reuters had forecast a 3 percent rise in Tesco's UK like-for-like sales excluding fuel, the supermarket group's slowest growth in its home market in several years, hurt by bad weather, rate rises and tough comparatives from a year ago.

UK like-for-like sales had slowed to 2.4 percent in the second quarter, down from 4.7 percent in the first quarter, but the supermarket chain said the growth rate had picked up to around 5 percent in August.

''Tesco has delivered strong first-half progress across the Group, despite the challenges posed by the start-up investment required to establish our new U.S. and Direct businesses and by the effects of poor summer weather in the UK,'' Chief Executive Terry Leahy said in the results statement.

''We ended the first half strongly, with good sales momentum, and with the launch of our Fresh&Easy stores on the West Coast of the U.S. now just a few weeks away, I am confident we will make further progress in the second half,'' he added.

The group reported an underlying pretax profit of 1.317 billion pounds ( LONDON, Oct 2 (Reuters) Tesco, the world's third largest retailer, reported a slowdown in growth in its core British market in the half year, but total sales in its international business grew by 23.1 percent.

Sales excluding fuel at Tesco's UK stores open at least a year rose 3.5 percent in the 26 weeks to Aug. 25, exceeding analysts' expectations.

Analysts polled by Reuters had forecast a 3 percent rise in Tesco's UK like-for-like sales excluding fuel, the supermarket group's slowest growth in its home market in several years, hurt by bad weather, rate rises and tough comparatives from a year ago.

UK like-for-like sales had slowed to 2.4 percent in the second quarter, down from 4.7 percent in the first quarter, but the supermarket chain said the growth rate had picked up to around 5 percent in August.

''Tesco has delivered strong first-half progress across the Group, despite the challenges posed by the start-up investment required to establish our new U.S. and Direct businesses and by the effects of poor summer weather in the UK,'' Chief Executive Terry Leahy said in the results statement.

''We ended the first half strongly, with good sales momentum, and with the launch of our Fresh&Easy stores on the West Coast of the U.S. now just a few weeks away, I am confident we will make further progress in the second half,'' he added.

The group reported an underlying pretax profit of 1.317 billion pounds ($2.7 billion) for the half, up 14.3 percent from last year, and compared with a Reuters poll of 1.3 billion.

Its international business in 12 countries outside Britain saw sales rose 23.1 percent at constant exchange rates to 6.4 billion pounds, helped by its fast opening programme in emerging markets China, Malaysia and Thailand.

Tesco proposed an interim dividend of 3.2 pence per share, up from 2.81p last year.

Shares in Tesco closed at 435.5p on Monday, valuing the company at around 34.2 billion pounds.

REUTERS KR HS1159 .7 billion) for the half, up 14.3 percent from last year, and compared with a Reuters poll of 1.3 billion.

Its international business in 12 countries outside Britain saw sales rose 23.1 percent at constant exchange rates to 6.4 billion pounds, helped by its fast opening programme in emerging markets China, Malaysia and Thailand.

Tesco proposed an interim dividend of 3.2 pence per share, up from 2.81p last year.

Shares in Tesco closed at 435.5p on Monday, valuing the company at around 34.2 billion pounds.

REUTERS KR HS1159

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