Tesco became the latest supermarket giant to confound the doomsters yesterday when it surprised the market with a positive performance over Christmas and New Year.
Britain’s biggest retailer posted a 1.3 per cent lift in UK like-for-like sales over the six weeks to 9 January. That followed news earlier this week of an unanticipated 0.2 per cent rise in same-floorspace sales at embattled Morrisons in the festive period, and a smaller-than-expected 0.4 per cent drop in sales at Sainsbury’s.
Shares in Tesco rose on the trading update, with group-wide performance showing a more impressive sales rise of 2.1 per cent due to a 4 per cent jump in overseas’ revenues.
The City consensus expectation for Scotland’s biggest supermarket group, with some 200 stores and 30,000 staff north of the Border, had been for sales to have fallen between 2 and 3 per cent despite the efforts to turn it around by chief executive Dave Lewis.
The outturn was less cheerful for the retailer’s third quarter to 28 November, with UK like-for-like sales down 1.5 per cent and group sales off 0.5 per cent. But City retail analysts said even that was a broadly positive result after the company’s troubles and management upheaval in the past few years.
Richard Hunter, equities head at Hargreaves Lansdown, said: “With its competitors already having provided some pleasant surprises, Tesco has completed the supermarket sweep with an update which has highlighted a particularly strong Christmas trading period.
“The picture for Q3 overall may makes less positive reading, although a return to growth for the first time in four years is an achievement, albeit at an anaemic rate.”
Hunter said that Tesco’s performance in the longer third-quarter period had been hit after ditching its “£5 off £40” promotion held in the comparable period 2014, while the industry themes of food deflation and ferocious competitor activity are much in evidence”.
He said that Edinburgh-based Tesco Bank, employing 3,000 in all, had also shown “marked signs of improvement”.
Homing in on the festive positives, Lewis said: “Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products. There is plenty more to do, but we are making good progress.”
Asda, owned by US giant Walmart, reports on its Christmas trading next month.