Last checked at 
* Q1 underlying UK like-for-like sales +0.5%; forecast -1%
* Strong contribution from general merchandise, clothing
* Q1 underlying UK like-for-like sales +9.3% on 2-year basis
(Adds detail)
By James Davey
LONDON, June 18 (Reuters) - Tesco, Britain's biggest
retailer, reported a sharp slowdown in underlying UK sales
growth in its first quarter, reflecting a tough comparison with
the same quarter last year when consumers stocked up in the
country's first COVID-19 lockdown.
The group said UK like-for-like sales, excluding fuel and
VAT sales tax, rose 0.5% in the 13 weeks to May 29 - ahead of
analysts' average forecast of a fall of 1.0%, but down from
growth of 8.8% in the previous quarter.
Against the same quarter in 2019, before the pandemic
impacted trading, UK like-for-like sales were up 9.3%.
Tesco, which has a 27% share of Britain's grocery
market, said growth was driven by customers eating more meals at
home than before the pandemic.
Online sales were up 22.2% year-on-year and up 81.6% on a
two year basis.
The group flagged particularly strong contributions from
general merchandise and clothing, with like-for-like sales up
10.3% and 52.1% year-on-year respectively.
Tesco kept its profit guidance for the 2021-22 fiscal year.
"While the market outlook remains uncertain, I'm pleased
with the strong start we've made to the year and continue to be
excited about the many opportunities we have to create value
over the longer term," said Chief Executive Ken Murphy.
Tesco has said it expects full-year retail operating profit
on a continuing operations basis to be similar to 2019-20.
Rivals Sainsbury's and Morrisons have also
forecast a strong recovery in profits this year as the extra
costs of the pandemic reduce.
Shares in Tesco closed on Thursday at 231 pence, valuing the
business at 18 billion pounds ($25 billion).
($1 = 0.7203 pounds)
(Reporting by James Davey Editing by Sarah Young and Mark
Potter)
