Tesco PLC (LSE:TSCO) shares fell almost 3% to 443.23p after the supermarket giant reported a slowdown in first-quarter sales growth but maintained profit guidance for the current financial year after a strong performance in its core UK business.
Sales at the UK's largest grocery chain, excluding VAT and fuel, rose 1.0% to £16.8 billion in the 13 weeks to 30 May.
Group like-for-like sales growth came in at 1.0%, down from 3.5% over the whole of last year, including strong 5.1% in the first quarter.
UK and Ireland sales rose to £13.4 billion, with LFLs up 1.8%. UK food sales increased 2.6%, with fresh food sales up 3.6% and online sales growing 8.9%.
Ireland delivered like-for-like sales growth of 3.3%, supported by higher food volumes and online sales growth of 10.9%.
Sales from wholesale arm Booker fell 3.2%, reflecting the exit of a lower-margin national account and a strong comparative period last year.
Central Europe saw just 0.8% LFL growth, supported by volume gains in food and online growth of 17.4%.
Chief executive Ken Murphy said: "I am pleased with our progress in the first quarter, with customer satisfaction up strongly and continued sales growth building on the exceptional performance we delivered last year."
Guidance was reiterated for adjusted operating profit of £3.0 billion to £3.3 billion in the 2026-27 financial year and free cash flow of £1.5 billion to £2.0 billion.
The grocer has bought back £341 million of shares since launching a £750 million buyback programme in April, with the remainder due to be completed by April 2027.
Broker Shore Capital said the "anticipated slowdown in revenue momentum" should be regarded against the "tough comparatives" from the strong growth seen a year ago.
All divisional performances were "in line with or slightly better" than recent expectations, which had been lowered across the City in the past month.
** UPDATE: Adds share price and broker comment **
