Tesco today reported “another step in the right direction” despite UK like-for-like sales falling by 1.3% in the first quarter of its new financial year.

The supermarket giant said the figure was an improvement on the 4% fall in the same period last year and a 1.7% decline in the previous quarter.

Tesco chief executive Dave Lewis said: “Whilst the market is still challenging and volatility is likely to remain a feature of short-term performance, these first quarter results represent another step in the right direction.”

Sales in Ireland fell by 4.4%, compared with 5.6% a year ago, while Asian revenue dropped by 3%, a slight improvement on the 3.2% fall in first quarter of last year.

Tesco said separate figures from Kantar Worldpanel had also shown that 180,000 more customers shopped at the supermarket in the 12 weeks to 24 May.

Mr Lewis said: “We set out to serve our customers a little better every day and the improvements we are making are starting to have an effect. We are fixing the fundamentals of shopping to win back customers and relying less on short-term couponing.

“These improvements have come during the restructuring of our office and store management teams, which testifies to the focus, skill and commitment of colleagues across the business.”

The results come as a lively Tesco annual shareholder meeting is expected today amid investor concern over its chairman and the pay-offs of its departed chief executive.

Shareholder body Pirc recommends that investors vote against the supermarket’s remuneration report at the London meeting which allowed it to hand a £1.2million pay-off to former boss Philip Clarke, on top of £764,000 in salary until mid-January.

Mr Clarke was given the leaving pay-off in February, despite the group’s financial woes, while former finance director Laurie McIlwee was also paid about £1m on leaving in addition to salary payments.

Tesco said it plans to claw back the leaving payment if it finds there was gross misconduct following the discovery of an accounting black hole.

But Pirc said: “Such service payments are particularly concerning as the track record of these two executives at the head of the company was particularly poor.”

Annual figures in April showed Tesco suffered one of the biggest losses in corporate history as it reported a £6.4billion loss, including a hefty write-down in property values, and warned of a tough challenge to return to profit growth this year.

Forecasters had predicted the company’s first quarter like-for-like sales would be down around 2% as Mr Lewis imposed measures to revive the fortunes of Britain’s largest supermarket.

In January, Tesco published the location of 43 loss-making stores that will close and shelved plans to open a further 49 stores.

Mr Lewis has also cut prices across hundreds of lines as the supermarket price war hots up with major grocers battling discounters such as Aldi and Lidl.

Other changes under Mr Lewis also include shutting Tesco’s final salary pension scheme, disposing of its loss-making Blinkbox operation selling online videos and moving its main headquarters from Cheshunt to Welwyn Garden City in a measure expected to save £250m.

Mr Lewis, who replaced Mr Clarke in September in a bid to restore the fortunes of the supermarket giant’s core UK business, was paid £4.1m in his first six months.