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Last Updated: Friday, 25 November 2005, 08:15 GMT
Tough market fails to dent Tesco
Sir Terry Leahy - chief executive of Tesco
Tesco plans to open 150 stores overseas by the end of the financial year
Supermarket giant Tesco has revealed a strong rise in sales, despite what it called a "slowing market".

Sales across the group jumped 13.9% during the 14 weeks to 19 November, led by a 23.3% surge in international sales. UK sales grew by 11.6%.

Looking ahead, Tesco said it was on track to open 150 stores abroad in the second half of the year.

Tesco's overseas operations - from Japan to the Czech Republic - now account for 20% of its turnover.

The core UK business has delivered another strong performance against tougher comparatives

Analysts say it plans to increase its global presence to offset a lack of growth opportunities in the UK.

In the past four weeks, the firm has opened 25 stores in eight countries, including its first store in Guangzhou, southern China.

Back in the UK, the group is reaping the benefit of extending its operations outside its traditional food market - saying it continued to see "double-digit" growth in its UK non-food operations.

New markets

Tesco has added a host of non-food ranges like clothing, home entertainment, mobile phones and even contact lenses, clawing away market share from other High Street retailers, including HMV and Boots. "The core UK business has delivered another strong performance against tougher comparatives," the group said in its trading update.

UK retailers are currently struggling against a consumer slowdown, as higher energy costs continue to crimp spending.

Price cuts launched by Tesco in its continuing battle against rival Asda and in response to the resurgence of Sainsbury's and Marks & Spencer resulted in price deflation of 1.6% in the period - compared with 2% in the first half.

However, Tesco continues to lead the UK market.

Strong position

Over the last five years the group has grabbed more than half of the growth in the UK supermarket sector, according to research firm Verdict.

As a result, Tesco holds a 23.7% market share - almost double that of Sainsbury's 12.5% and ahead of Asda's 11.7%.

"This is a phenomenal achievement for one retailer and is unrivalled in any other major UK supermarket sector," said Verdict senior retail analyst Gavin Rothwell.

Meanwhile, more recent figures from research firm TNS - covering the 12 weeks to November 12 and based on a different measure of the grocery sector- show that while Tesco continues to dominate the UK market, its UK market share dipped 0.1% to 30.2%.

But the figure still stands ahead of its 28.3% share of the market at the same time last year.

Tesco's strong position in the UK marketplace has drawn criticism from small business advocates, environmental groups, trade unions and supermarket rivals.

Meanwhile, the supermarket sector as a whole is to be investigated by the Competition Commission amid concerns over their domination of the grocery market.

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