Tesco is festive victor reporting record Christmas sales

Robyn Ryan
January 13, 2018

Although clothing rival Next reported better-than-expected Christmas sales last week, M&S is not the only British retailer to have struggled.

Perhaps unsurprisingly given that grocery inflation hit 3.6% in December, food sales were the main growth driver - jumping 3.4% over the four-week period.

And Tesco, Britain's biggest retailer, missed forecasts for its festive trading.

Analyst Adam Tomlinson at Liberum said: "A tough October impacted and the business carried more stock into its December sales than planned".

John Lewis said like-for-like sales rose 3.1% for the six weeks to 30 December, while its Waitrose supermarket chain posted a 1.5% rise compared with the same period in 2016. It saw United Kingdom like-for-like sales tumble 2.6% in the 17 weeks to December 30, although "tactical promotional action" helped group sales improve over the six-week Christmas period, rising by 1.2% on a like-for-like basis.

Steve Rowe, chief executive of M&S said: "The impact of an unseasonal October resulted in an overall revenue decline".

This helped Tesco notch up a 2.3% rise in third quarter comparable sales.

"Sales in clothing and home actually fell by the biggest margin, but in a market which is shrinking, that's more a reflection of wider economic trends", he said.

Food sales grew by 3.4 percent, and fresh food specifically by 3.7 percent in the six weeks before Christmas, Lewis said, but weaker sales in general merchandise were a 0.6 percent drag and the disruption in tobacco supplies took a 0.5 percent toll.

Lewis's strategy to rebuild Tesco following an accounting scandal in 2014 has been based on increasing food sales.

"Trading pressure continued into the lead up to Christmas".

Recruitment firm Hays climbed nearly 3 percent on posting double-digit growth in Q2 net fees.

Thursday's slew of trading updates also appeared to suggest a victory for Moz the Monster, John Lewis's ad campaign star, over Paddington Bear - who featured in M&S's marketing.

Its Central Europe business saw a 0.8% like-for-like sales increase, however Asia, a market in which Tesco has instigated the ceasing of bulk selling in Thailand over the past year, fell 9.6%.

Commenting on the group's United Kingdom performance, Tesco chief executive Dave Lewis said, "We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years".

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