Business

Tesco shrugs off 'subdued' market to see festive sales edge higher

Tesco eked out a 0.1 per cent rise in UK sales over the key Christmas trading weeks despite "challenging" trading conditions
Tesco eked out a 0.1 per cent rise in UK sales over the key Christmas trading weeks despite "challenging" trading conditions Tesco eked out a 0.1 per cent rise in UK sales over the key Christmas trading weeks despite "challenging" trading conditions

SUPERMARKET Tesco has said it eked out a 0.1 per cent 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 per cent 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 per cent as it suffered tougher trading across central Europe and Asia - down by 9.1 per cent and 1.4 per cent 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 per cent over the 13 weeks to November 23.

Across its UK and Ireland operation, comparable store sales lifted 0.4 per cent 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 per cent over the 19 weeks.

Shares lifted 2 per cent after the update.

In the UK, the group saw food outshine a weaker performance from general merchandise, which saw sales fall 0.4 per cent 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.

Elsewhere yesterday, Marks & Spencer's food division had a "standout" performance over Christmas, helping lift what was otherwise a disappointing trading period for the business.

UK food revenue grew 1.5 per cent to £1.7 million in the three months to the end of December, the company said.

However, M&S clothes stores fared much worse, with sales in the clothing and home division dropping 2.7 per cent to £1.1 million in the third quarter.

On a like-for-like basis, which strips out the effect of new stores and closures, UK revenue grew 0.2 per cent.

Chief executive Steve Rowe said: "The food business continued to outperform the market, and clothing and home had a strong start to the quarter, albeit this was followed by a challenging trading environment in the lead-up to Christmas."

He added that "disappointing one-off issues" such as waste in the food business and the performance of its gifts range "held us back from delivering a stronger result".