Tesco's shares are up sharply as the profits warning which some analysts feared would accompany today’s trading update has failed to materialise.

And, on the face of it, there is still plenty of good news surrounding Tesco. International sales growth, in particular, looks to be better than many bears had anticipated and especially in Asia.

It is also especially encouraging that Tesco’s early US stores have now moved “strongly” into like-for-like growth. Despite a good deal of initial scepticism in the market, the Fresh & Easy format looks to be succeeding in the US overall, in spite of the extremely unhelpful economic backdrop.

That’s the good news. The main concerns over Tesco remain in its UK stamping ground and, despite some apparently buoyant growth figures in the quarter on which the company is reporting today, some industry observers remain uneasy.

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In particular, concern persists over Tesco’s newly-launched discount ranges, launched to compete with the likes of Aldi and Lidl. In its statement, Tesco says that, due to the new ranges, more than 300,000 new customers are shopping with it every week. It says this proves the new ranges are a success.

What they don’t say is that, earlier this year, they were actually attracting far more new customers. Data produced by industry analysts TNS Worldpanel shows that for example, in the quarter ended 13 July, Tesco attracted 522,220 new shoppers. So the rate at which it is attracting new shoppers has actually slowed down considerably.

Secondly, while more than 300,000 new customers sounds pretty good, it is also far short of of the new shoppers visiting Tesco’s major rivals — Asda, Sainsbury’s and Morrisons. So it is far from clear that the discounting strategy is working.

Bear in mind, also, that this was a sales update. We don’t know to what extent the new discount ranges are cannibalising Tesco’s own sales and the accompanying impact this is having on margins and profits. All that will only emerge next year with publication of the annual results next April.

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