Customer Behaviour

Tesco has reported a rise in Christmas sales, helped by strong demand for fresh food. Christmas like-for-like sales, which strip out the impact of new store openings, grew 0.7% in the UK, and were up by 0.3% across the group as a whole.

Chief executive Dave Lewis said the supermarket giant had made “sustained strong progress”.

But Tesco shares dropped more than 2% in early trading after reporting disappointing non-food sales in the UK.

It said sales had taken a 0.8% hit from not repeating a Clubcard ‘Boost’ promotion.

International like-for-like sales were down 1.2% after “a particularly strong seasonal performance last year in addition to weaker consumer spending in Thailand”.

The UK’s largest supermarket group also reported third-quarter sales figures, which covered the 13 weeks to 26 November. It said UK like-for-like sales rose 1.8% in the quarter, while group sales were up 1.5%.

Tesco’s sales have been broadly recovering since it reported a record loss in 2015. Mr Lewis said: “We are very encouraged by the sustained strong progress that we are making across the group.

“In the UK, we saw our eighth consecutive quarter of volume growth and delivered a third successful Christmas.”

He said fresh food had been “particularly popular, outperforming the market.”

The supermarket giant said there had been a 24% increase in party food sales and an 18% rise in Free From sales over Christmas.

Clothing and toys also had a “strong performance” over the festive period, Tesco said, with sales rising 4.3% and 8.5% respectively.

Reaction to the figures from industry analysts was mixed.

Nicholas Hyett, from Hargreaves Lansdown, said that there had been a sales slowdown since last year, when Christmas sales rose 1.3%.

“It’s five years since Tesco last took market share from its competitors,” he said.

“There are signs that the giant might be stirring once again, but a slow down over the Christmas period will leave many investors worrying whether the group can achieve sustained growth.”

However, Richard Hunter of Wilson King Investment Management said: “Following a strong set of numbers across the rest of the sector, Tesco has completed the supermarket sweep.

“The much publicised potential damage to the UK economy following Brexit is an area where the UK consumer seems not to have read the script.

“For Tesco, this has translated into a solid Christmas performance.”

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