Tesco has said that its UK sales were flat in the company’s second quarter, despite a turnaround plan that has injected £1 billion into the company.

Coupled with a poor performance in its European markets, the lack of growth in the UK brought first half group trading profit down 7.6%,

Philip Clarke, chief executive, said: Despite continuing challenges, we have made further progress on our strategic priorities.  We are strengthening our UK business, working to establish multichannel leadership and pursuing disciplined international growth.

“Our performance in the UK has strengthened through the half, particularly in our food business, as we have continued our work to Build a Better Tesco.  More and more customers are benefiting from a better shopping environment, as our store refresh programme has gathered momentum.

“We have continued our focus on becoming the leading multichannel retailer.  Our online grocery businesses have continued to perform well across the group, and we are now offering the service in over 50 cities across nine markets outside the UK.

“The challenging retail environment in Europe has continued to affect the performance and profitability of our businesses there.  The investments we have made to improve our offer for customers in the region are already starting to take effect and we expect a stronger second half as a result.

Despite its disastrous foray into the US with its Fresh & Easy brand, Tesco has not let up on foreign investment, announcing a joint venture with China Resources Enterprise to create the leading multi-format retailer in China.

The deal will give Tesco a 20% stake in the joint venture which is anticipated to create sales approaching £10 billion.