Tesco shrugs off gloom with surprise rise in festive sales
Tesco delivered the latest piece of good news from the embattled supermarket sector as it posted a shock rise in sales over Christmas.
Northern Ireland's biggest grocery chain, which has around 55 stores of different sizes around the province, hailed a "strong Christmas" after revealing a 1.3% rise in UK like-for-like sales in the six weeks to January 9.
Shares jumped by 5% after the update beat expectations, with some City analysts having pencilled in a sales fall of nearly 3%.
Experts said the figures were further evidence that the turnaround being led by chief executive Dave Lewis is working.
The update comes after better-than-forecast figures from rivals Morrisons and Sainsbury's earlier this week, pointing to a robust Christmas for the major players despite tough trading conditions.
Tesco has been battling to halt a decline in sales in the face of stiff competition from German discounters Lidl and Aldi, while the sector has also been waging a fierce price war.
The company's third quarter figures for the 13 weeks ending November 28 highlighted the difficult market, with group like-for-like sales down 0.5% and the UK figure down by 1.5%, although the domestic performance was hit after Tesco scrapped the "£5 off £40" promotion it held in 2014.
Mr Lewis said: "Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products. There is plenty more to do, but we are making good progress."
Market analysts at Bernstein added: "Sales turning positive over Christmas is a great result for Tesco and, combined with the strong performance in its international business, suggests that the company is well on the way to recovery."
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "With its competitors already having provided some pleasant surprises, Tesco has completed the supermarket sweep with an update which has highlighted a particularly strong Christmas trading period."
Meanwhile, Sainsbury's reported a better-than-feared decline in like-for-like sales of 0.4% in the 15 weeks to January 9 on Wednesday, although it did not break down the figures for the final Christmas weeks.
Tuesday saw smaller rival Morrisons deliver a surprise 0.2% rise in sales for the nine weeks to January 3 - its first festive sales increase for four years.
Asda, which is owned by the American giant Walmart, does not report on its Christmas trading until next month.