Tesco, Britain's biggest retailer, reported on Thursday a second successive quarter of UK underlying sales growth, the first time it has done so in more than five years, signalling its recovery is making steady progress under CEO Dave Lewis.

That compared with analysts' forecasts of flat to up 0.5 percent and built on growth of 0.9 percent in the previous quarter - its first quarter of UK underlying sales growth for over three years.

Group like-for-like sales grew 0.9 percent, boosted by strong international sales, which were 3 percent higher.

"We are encouraged by the progress we are making," said Lewis. "I am confident that the improvements we are making for customers are working and will create long-term value for our shareholders."

Lewis cautioned, however, that the market remained challenging, with Britain's supermarket sector intensely competitive and experiencing price deflation.

Tesco warned in April that profit growth would be harder to deliver this year than last, given the ongoing price war against traditional supermarket rivals including Sainsbury's, plus fast-growing German discount chains Aldi and Lidl.

Though former Unilever executive Lewis has impressed investors with his decisive action since replacing the sacked Phil Clarke in September 2014, Tesco's shares have still fallen 22 percent over the last year, reflecting the difficult market.

First quarter sales in the UK were boosted by strong demand for Tesco's new fresh food brands which were launched in March, the company said, helping the volume of goods it sold rise by 2.2 percent in the period