London, June 15 - Tesco, Britain's biggest retailer, is expected to report a pick-up in underlying UK sales growth on Tuesday, but show it is still lagging growth at rivals such as J Sainsbury, which reports a day later.
Tesco, which accounts for almost one in every three pounds spent in British supermarkets, has been losing market share for months in an industry benefiting from higher food prices but also offering record levels of promotions.
Much of Tesco's underperformance is due to customers switching to its cheaper discount brands range, which has boosted sales volumes but meant it has not benefited from food price inflation as much as rivals, the company says.
Exane analysts estimate this switch has depressed Tesco's sales by about 2.5 percentage points. Adjusting for that, the group's performance is much closer to its competitors.
Analysts expect Tesco to report a 4.3 percent rise in first-quarter UK like-for-like sales, excluding fuel and VAT, according to the average of eight polled by Reuters.
The forecast range for the 13 weeks to May 30 is for a rise between 4 percent and 4.5 percent.
That would be up from 3.7 percent in the fourth quarter and broadly in line with the 4.4 percent increase reported for the first six weeks of the new financial year.
Analysts expect Tesco's international sales to climb by around 20 percent, with new openings and currency moves more than offsetting an expected fall in like-for-like sales.
That is likely to produce an increase in first-quarter group sales of about 9 to 10 percent, they estimate.
Sainsbury, Britain's third-biggest supermarket group, is expected to report a 7.3 percent rise in first-quarter sales at stores open at least a year, excluding fuel and VAT, according to a Reuters poll of six analysts.
The forecast range for the 12 weeks to June 13 is for a rise of between 7 percent and 7.8 percent.
Earlier this month Wm Morrison Supermarkets, Britain's fourth-biggest grocer, posted an 8.2 percent rise in underlying like-for-like sales for the 13 weeks to May 3.
Tesco's and Sainsbury's shares have both performed broadly in line with the DJ Stoxx European retail index .SXRP this year. Tesco's, however, trade at 12.3 times forecast earnings, below Sainsbury on 14.3 times and also below international rival Carrefour on 12.6 times.