Empire building

2 October 2007 By John Foley Follow @johnsfoley

Thanks to the supermarket group s sheer scale, registering the lowest UK likeforlike sales in years looks little more than a blip. As the UK gets more mature, Tesco has to keep moving to retain momentum. But for now, its expansion machine still looks undervalued.

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Tesco reported likeforlike sales growth in its UK stores of 2.7% for the firsthalf of the year including petrol its lowest rate of growth since at least 2000. The UK supermarket group attributed the slowing growth to unusually poor weather over the summer, and added that sales had picked up to 5% by the end of August.

Overall, Tesco's sales grew 9.9% in the first half, driven by growth of 22% in its international business. NonUK sales now make up over a quarter of the group total, and 60% of Tesco's floorspace is outside its home market.

Tesco will have invested around £9.5bn in expanding into nonUK markets by February 2008, according to Lehman Brothers estimates. The group is about to launch its latest overseas venture, a chain of convenience stores on the US west coast.

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