However, the grocer stopped short of issuing another profit warning.
There were encouraging signs for Edinburgh-based Tesco Bank which returned to growth and said it is on track to launch long-awaited current accounts in the first half of next year.
Tesco, which has 180 stores in Scotland, reported a 1.5% decline in like-for-like sales in the UK in the 13 weeks to November 23, which it blamed on a weaker grocery market.
The group also experienced reverses overseas with sharp declines in Thailand, South Korea and Ireland.
The fall in UK sales was in line with City forecasts and comes after a flat performance in the previous three months. The drop followed a 0.7% decline for the equivalent period last year.
Mr Clarke said: "Continuing pressures on UK household finances have made the grocery market more challenging for everyone since the summer and our third quarter performance reflects this.
"The actions we have taken to position the business for the future - including the work currently underway to transform our general merchandise offer and our decision to significantly reduce the amount of new space we open - are also holding back our sales performance in the short-term."
He said recent changes to the business, such as the relaunch of its Finest range and the refurbishment of more than 100 stores in the quarter, had been well-received by shoppers. Its online business has also recorded a record number of grocery orders.
Tesco is being squeezed between a resurgent discount sector led by the likes of Lidl and upmarket such as John Lewis-owned Waitrose.
John Ibbotson, director of consultancy Retail Vision, said: "Everything now depends on the critical Christmas period, but schmaltzy advertising, sponsorship of Downton Abbey and promising jam tomorrow are no guarantees that things will turn around."
Despite relief in the City that Tesco maintained its profit expectations, its shares continued on their recent downward trajectory, closing off down 1.6p, or 0.5%, to 340p.
Tesco Bank, which has large operations in Edinburgh and Glasgow, said it had seen sales rise by 0.9% year-on-year in the period, after a decline in revenues in the first half of the group's financial year. The bank said it had benefited from an increase in interest income from strong lending growth but this was offset by reduced fee income from insurance.
Tesco said: "We remain on track to complete our full range of banking products with the launch of current accounts in the first half of next year."
Tesco Bank, which was a joint venture with Royal Bank of Scotland until 2008, had initially planned to offer current accounts from 2012 but opted to wait until new account switching rules came into force in September.
Current accounts are a key product for banks because they can be used as a base for selling other products.
Tesco Bank, which is headed by former HBOS and RBS executive Benny Higgins, already sells loans and credit cards and last year launched mortgages.