In the same period a year ago, UK sales dropped by 4 per cent.
“We are fixing the fundamentals of shopping to win back customers and relying less on short-term couponing,” said chief executive Dave Lewis.
The BBC reports that across the company, sales dropped 1.3 per cent compared with a 3.4 per cent dip a year ago.
The UK result beat analysts’ forecasts of a fall of 1.6 per cent-3 per cent and is also an improvement on the 1.7 per cent fall reported in the fourth quarter of the last financial year.
Mr Lewis, who took the helm in September, is trying to revive the fortunes of Britain’s largest supermarket after it reported the worst loss in its history in April.
Tesco posted a full-year pre-tax loss of £6.4bn, one of the largest in the country’s corporate history. Around £4.7bn of the losses were the result of the fall in property value of its UK stores, 43 of which it said would close.
The trading update from Tesco comes ahead of an annual meeting of shareholders later.
Tim Bush of pension advisers Pirc told the BBC’s Today programme that investors are likely to question payoffs for Tesco’s former chief executive and finance director Philip Clarke and Laurie McIlwee, who shared £2.2m in severance pay after the supermarket said it was “contractually committed” to make the payments.
The pair, who left the firm last year, were awarded £1,217,000 and £970,880 respectively.
The payments were initially suspended while Tesco investigated last year’s £263m accounting scandal.
“Things have stopped getting worse but they haven’t yet started getting better,” said Mr Bush .