Tesco beats Christmas retail blues with strong sales rise

Tesco has emerged as one of the winners over Christmas period as other big retailers such as John Lewis and Marks & Spencer suffered, reporting its best growth in nearly a decade.

Britain’s largest retailer posted 2.2% growth in UK like-for-like sales in the six weeks to 5 January, its best Christmas performance since December 2009. Sales rose 0.7% in its third quarter, the 13 weeks to 24 November.

Its chief executive, Dave Lewis, described it as a “very strong Christmas performance which was ahead of the market”.

Lewis said there had been a “flight to value” within Tesco, with shoppers seeking out its cheapest range, Exclusively at Tesco, while its more upmarket “Finest” range also fared well. The supermarket’s “Free from” range of gluten-free and wheat-free products – the biggest in the UK – posted an 11% rise in sales.

Lewis said Tesco had also benefited from its decision to run fewer Black Friday promotions than in previous years.

Tesco’s upbeat trading update came amid a flurry of figures from other retailers, which fared poorly. John Lewis warned it may not pay a staff bonus this year and Marks & Spencer reported a slump in food and clothing sales. It has been the worst Christmas for retailers since the financial crisis, according to an industry survey, with all areas of the high street suffering declines except food.

Among the supermarkets, Tesco’s performance contrasts with that of Sainsbury’s, which posted a 1.1% drop in sales at established stores. It blamed consumer caution and fewer Black Friday discounts on toys and electrical goods at its Argos chain.

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Morrisons managed to achieve growth in like-for-like sales for a fourth consecutive Christmas, of 0.6%, just ahead of City forecasts. The UK’s fourth-biggest supermarket said its strategy of slashing prices had paid off.

Aldi was another festive winner, ringing up its busiest ever week and a 10% rise in sales in the week before Christmas from a year earlier. The German discount retailer pointed to the popularity of its premium range, such as beef chateaubriand, 32-year-old French brandy and panettone. Sales were also boosted by 65 store openings last year.

Tesco said that including Booker, the cash-and-carry group it acquired in late 2017, like-for-like sales grew even more strongly, by 2.6% over Christmas and 1.9% in the third quarter.

The supermarket group has held talks with suppliers about stockpiling long-life products ahead of Brexit, Lewis said.

“It’s not so possible to do that on fresh food and that’s where the pinch point will be” if the UK crashes out of the EU without a deal, he warned, given that the UK imports “half the fresh food it eats”.



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