Tesco chief sees progress amid worst sales in a decade

Tesco is expected to partly blame the fall in sales on a contraction in the overall market, deflation due to price cuts, fewer promotions as the retailer focuses more on everyday low prices, and disruptions to stores from the acceleration of a revamp scheme.

However, analysts and investors are still likely to be left unsettled by the performance. Mike Dennis, analyst at Cantor Fitzgerald, said: “It seems Tesco is stuck in the middle and investors could be questioning management’s strategy.

“We should be seeing the effects of several new store services, capital spent on new own label lines and relaunches, store refurbishment and the annualising of 'Horsegate’ and major non-food disruption.”

James Anstead, at Barclays Capital, said: “Despite the existence of some valid reasons for Tesco’s like-for-like weakness, the market will likely want to see hard evidence of Tesco’s turnaround gaining traction before buying into the story with conviction.”

It is understood Tesco is unlikely to announce the appointment of a new chief financial officer alongside the trading update. Laurie McIlwee quit as CFO in April.

Investors have questioned the structure and experience of the Tesco board, with Mr Clarke now the only permanent executive.

The Sunday Telegraph revealed that chairman Sir Richard Broadbent is likely to hire a new non-executive with expertise in the retail industry by the end of the year.

Meanwhile, Tesco’s beleaguered rival Morrisons has stepped up its plans to return cash to shareholders through property sales.

The company has put together a £223m portfolio of four properties it wants to sell off with property agent Cushman & Wakefield.

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