Tesco shrugs off ‘subdued’ market to see festive sales edge higher
Tesco’s Christmas trading figures come after rivals Sainsbury’s and Morrisons both posted sales slumps.
Supermarket Tesco has said it eked out a 0.1% rise in UK sales over Christmas trading despite “subdued” consumer spending.
The UK’s biggest grocery chain said it outperformed in a “challenging” market, delivering its fifth Christmas in a row of sales growth.
But while UK same-store sales grew in the six weeks to January 4, it saw a 0.2% drop in the 19 weeks covering both the third quarter and festive period.
Outgoing chief executive Dave Lewis, who recently announced plans to step down in the summer, said: “In a subdued UK market we performed well, delivering our fifth consecutive Christmas of growth.”
“As a result, this Christmas we had the biggest-ever day of UK food sales in our history,” he added.
The figures see Tesco emerge as a festive winner among the major players so far after both Morrisons and Sainsbury’s posted falling sales over the Christmas season in recent days.
But Tesco said like-for-like sales across the entire group fell by 0.8% as it suffered tougher trading across central Europe and Asia – down by 9.1% and 1.4% respectively over the six-week Christmas period.
Tesco recently said it was reviewing its operations in Thailand and Malaysia after receiving interest from potential buyers, but gave no further details on Thursday.
A breakdown of the 19-week figures showed third-quarter UK like-for-like sales fell 0.4% over the 13 weeks to November 23.
Across its UK and Ireland operation, comparable store sales lifted 0.4% in both the third quarter and over Christmas, thanks to a boost from the Irish stores and its Booker wholesale arm, where sales surged 4.1% over the 19 weeks.
Shares lifted 2% after the update.
In the UK, the group saw food outshine a weaker performance from general merchandise, which saw sales fall 0.4% over the 19-week period, though Tesco said this was largely down to an overhaul of its ranges as it refocuses on certain categories.
Rival Sainsbury’s blamed a dire toys and video games market for a hefty fall in general merchandise across its supermarket and Argos chain when it reported results on Wednesday.
The figures come as Tesco’s banking arm suffers a hit from the cyber attack on foreign currency giant Travelex, with the group one of a raft of lenders left with no online travel money services.
Tesco said it was “regrettable” that it has had to suspend its online travel money and is in “close contact” with Travelex over the issue, but added that customers can still get foreign currency in 360 of its stores.
It declined to comment on Travelex’s handling of the crisis, which has drawn some criticism over the information provided to customers and partners in the days immediately after the attack on New Year’s Eve.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “It looks like aggressive price control has kept UK sales moving forwards over the Christmas period, but in a tough market Tesco has really been bailed out by a strong performance from wholesale arm Booker.”