Key TakeawaysShares of Tesco declined more than 2% following Q1 UK like-for-like sales growth of only 1.8%, below market expectationsTotal group like-for-like sales reached £16.83 billion, with UK food sales advancing 2.6% and fresh food climbing 3.6%The Booker wholesale division struggled with like-for-like sales declining 3.2%, worse than the anticipated 2.4% dropCompany reaffirmed full-year outlook: adjusted operating profit between £3–£3.3 billion and free cash flow of £1.5–£2 billionChief Executive Ken Murphy attributed the weakness to challenging weather-related comparisons versus the prior year periodShares of Tesco tumbled over 2% during Thursday’s trading session, hovering near 445p, following the release of first-quarter results that showed sales expansion trailing market forecasts for Britain’s leading grocery retailer.Tesco PLC, TSCO.LFor the 13-week period concluding May 30, UK like-for-like sales advanced 1.8%. This figure fell at the lower boundary of consensus estimates and trailed Visible Alpha projections by approximately 50 basis points, representing a notable deceleration from the previous year’s growth trajectory.Chief Executive Ken Murphy moved swiftly to downplay concerns. During a media briefing, he emphasized that weather patterns played a significant role in the outcome, noting that the comparison period from last year benefited from “outstanding” climatic conditions that unusually elevated performance.“I wouldn’t be reading too much into it,” Murphy stated.Overall group like-for-like sales similarly increased 1.8%, totaling £16.83 billion. Within the UK market, food sales posted a 2.6% gain, while fresh food categories delivered a stronger 3.6% uptick.Analysts at Bernstein echoed Murphy’s assessment, characterizing the deceleration as likely seasonal and transitory. The firm identified moderating food price inflation, more difficult year-over-year comparisons, and weaker non-food category demand as primary drivers — rather than any fundamental deterioration in Tesco’s market standing.Wholesale Division StrugglesThe Booker wholesale operation emerged as an additional area of concern. Like-for-like sales in this segment contracted 3.2%, falling short of analyst projections for a 2.4% decrease.Core retail sales within Booker declined 1.5%, partially attributable to the loss of a significant national customer account. The catering segment experienced a 3.3% downturn, which management linked to adverse weather conditions and Easter calendar timing.Notwithstanding the top-line shortfall, Tesco maintained its full-year financial guidance. The company continues to project adjusted operating profit in the £3 billion to £3.3 billion range, alongside free cash flow between £1.5 billion and £2 billion for fiscal 2026/27.Positive Developments EmergeBeyond UK borders, Tesco’s Republic of Ireland operations delivered like-for-like growth of 3.3%, surpassing analyst expectations. Central European markets contributed 0.8% growth. Digital sales throughout international markets surged 17.4%.Customer sentiment indicators also showed improvement. Tesco’s UK net promoter score advanced six points on a year-over-year basis. The retailer expanded its Aldi Price Match program into convenience store locations as part of its value-focused competitive strategy.Management noted that Middle East geopolitical tensions have not materially impacted operations to date, though acknowledged the situation could potentially contribute to inflationary headwinds in subsequent quarters.Regarding capital allocation, Tesco has executed £341 million in share repurchases since initiating its £750 million buyback program in April.The post Tesco (TSCO) Stock Slides Over 2% Following Weak Q1 UK Sales Performance appeared first on Blockonomi.