Tesco beefs up with sales rise and a pledge to stay in UK

With rivals looking to make inroads into its dominance and City analysts looking for signs that its overseas expansion is going awry, the supermarket giant responded with a beefy set of third-quarter results.

Sales across the group are up 8.8%, the sort of return very few mature businesses in competitive markets can match, according to finance chief Laurie McIllwee.

Although like-for-like sales in the UK are up just 1.5% - a little lower than Sainsbury and Morrisons have lately achieved - McIllwee is not concerned.

"We are not one of those companies that go trough to peak, trough to peak," he said. "We grow steadily."

While the rate of sales growth was stronger overseas, the UK remains by far the most important market for Tesco. It currently has 2,482 British stores, which compares with 663 outlets in Thailand, its next largest national market.

Like-for-like sales in mainland Europe advanced by 3.6%, while those in Asia added 4.3%.

Tesco says that the UK is coming out of recession in reasonable shape, noting a "steady consumer recovery". Evidence for this includes booming sales of its Finest range - the most expensive of its own-brand goods.

McIllwee insists the company is good for Britain, offering competitive deals and creating many thousands of jobs. It has no intention of following Cadbury's to a corporate HQ in Switzerland.

"Tesco is in tune with its customers. We adapt our business to the economic environment, and from a government perspective we are helpful. We are not moving our business offshore - we are good for the Treasury," he said. Tesco pays around £1 billion in tax a year.

Tesco rekons that Christmas will be strong, predicting sales growth of around 3%.

Clive Black at Shore Capital said: "We believe investors should take some encouragement from this performance and management's sentiment."
Tesco shares added 6.95p to 426.95p. That leaves the company valued at £34.3 billion.