Comment: Tesco margin reset must be on the cards as food sales fall

Grocers still have a long hard road to travel before there’s peace in their troubled aisles, the BRC July sales figures showed.

Food sales fell 1.4% in total on a three-month basis, and by 3.5% like-for-like.

The figures no doubt came as little surprise in the big grocers’ boardrooms but were still an unnerving reminder of how deep is the sector’s malaise.

Supermarketing’s biggest beast, Tesco, is among those being most harshly punished as the industry readjusts. Not just by consumers, but by investors.

Tesco’s shares hit a 10-year low over the week as Standard & Poor’s took its scalpel to the grocer’s rating on the likelihood that profitability will continue to weaken over the next 12 months.

There’s an irony that amid all the talk of a price war food price inflation is actually up, admittedly only marginally.

The BRC reported last week that it stood at 0.3% - the lowest ever recorded but still up.

How long will that remain the case? As Dave Lewis prepares to join Tesco as chief executive in October a margin reset must be on the cards.