Tesco, Britain's biggest retailer, posted a fall in UK underlying sales in its first quarter, showing its recovery plan following January's shock profit warning is taking time to gain traction.

The firm, which accounts for about one in every £10 spent in British shops, said sales at British stores open over a year, excluding fuel and VAT sales tax, fell 1.5 per cent in the 13 weeks to May 26th.

That compares with analyst forecasts of a fall of 1-2 per cent, according to a Reuters poll, and a decline of 1.6 per cent in the fourth quarter to February 25th, which included a fall of 2.3 per cent over the Christmas trading period that prompted the retailer's first profit warning in over 20 years.

"Our performance in the UK has been steady during a challenging quarter for the industry as a whole," said the firm. "The industry remained very competitive through the quarter, with a significant amount of couponing activity."

Tesco's first quarter misses the benefit to food sales of celebrations to mark Queen Elizabeth's diamond jubilee and the late spring bank holiday, which both fell in the company's second quarter.

The sales outcome also reflected a tough comparative, as last year the wedding of Prince William and the spring bank holiday fell in the first quarter.

Tesco, the world's third largest retailer with over 6,000 stores in 14 countries, said first quarter sales for the group rose 2.2 per cent, including petrol.

"At this early stage of the year, we are performing in line with market expectations for the group. The outlook for the year as a whole remains unchanged," it added.

Reuters