Supermarket group Tesco, Britain's biggest retailer, on Wednesday posted sliding first-quarter sales, hit by intense competition from foreign-owned outlets and restructuring costs.
Tesco continues to faces fierce competition from British supermarket rivals such as Sainsbury's, and also Wal-Mart division Asda and German-owned discounters Aldi and Lidl, as cash-strapped consumers tighten their belts despite Britain's improving economy.
Total sales including petrol slid 3.7 percent in the three months to May 24, compared with a year earlier, Tesco said in a trading update, hit by a 2.0-percent drop in Britain.
On a like-for-like basis, which strips out the impact of new stores, British sales excluding petrol also sank by 3.7 percent as Tesco said it faced a "challenging" environment.
Back in April, Tesco had posted the second drop in annual profits in a row, hit by difficult trade in Europe and a costly investment plan that was aimed at turning around its domestic business in Britain.
"As expected, the acceleration of our plans is impacting our near-term sales performance," said chief executive Philip Clarke on Wednesday.
"The first quarter has also seen a continuation of the challenging consumer trends in the UK, reflecting still subdued levels of spending in addition to the more structural changes taking place across the retail industry."
Industry figures showed on Tuesday that Tesco's overall grocery market share in Britain has fallen sharply.
Data from Kantar Worldpanel showed that Tesco's share of the British grocery market fell to 29 percent in the 12 weeks to May 25, compared with 30.5 percent in the same period a year earlier.
Tesco is the world's third-biggest supermarket group after French rival Carrefour and with US retailer Wal-Mart in first place.
The embattled company meanwhile hopes that expansion into India and China can offset weakness in Europe.
Over the past two years, Tesco decided to close its failed US division Fresh & Easy and to exit from Japan.