Little time for goodwill between supermarkets

Retailers will take centre stage this week amid hopes that the high street managed to avoid a festive sales wipe-out.

The winners and losers in a vicious supermarket price war launched prior to Christmas will be revealed when three of the biggest players update the market.

Tesco, which has 2,700 UK stores and will update on Thursday, recently reported falling sales for a fourth quarter in a row despite a £500 million price-cutting campaign.

Its woes are expected to continue as rivals breathe down its neck by opening more stores and competing harder on price.

Matthew Truman, an analyst at JP Morgan Cazenove, forecasts that Tesco’s underlying sales will have fallen 1.5 per cent over the Christmas period, compared to a 0.9 per cent drop in its previous quarter.

Sainsbury’s, which is due to update on Wednesday, has been fighting its corner by rolling out its Brand Match scheme, which pledges to match thousands of prices at Tesco and Asda.

Its recent performance has been strong, with sales up 1.9 per cent in its most recent quarter, and the City expects it to reveal similar gains over Christmas. Unlike Tesco, its figure includes VAT.

Morrisons is expected to report that sales have slowed as the price wars take their toll.

The grocer, which has some 450 stores in the UK, has fared better than its main rivals in recent months because it sells relatively small amounts of non-food items.

On top of the groups’ own figures, market share data from Kantar Worldpanel for the four weeks to Christmas will be released tomorrow.

Mothercare’s sales misery is expected to have continued over Christmas, as supermarkets and online competitors steal its business.

The group, which has 353 UK stores and 969 overseas, recently reported a 7 per cent fall in underlying UK sales in the 28 weeks to 8 October and slipped to an £81.4m loss.

Analysts at Seymour Pierce expect falls of 9.2 per cent in the second half of its financial year.

Hollywood starlets Ryan Reynolds and Rosie Huntington-Whitely may have brought some glamour to Marks & Spencer’s adverts, but its clothing sales over Christmas are expected to lack sparkle.

The high street bellwether, which has more than 703 stores across the UK, is forecast to reveal a 1.5 per cent decline in like-for-like sales of general merchandise, which includes clothing and homeware, in the quarter to 31 December.

Despite covering the crucial run-up to Christmas, the decline in general merchandise sales is slightly steeper than the first six months of the year when the figure fell 1.3 per cent. However, the overall performance will be buoyed by food sales, which are forecast to have increased 1.5 per cent in the period.

Christmas was not so sweet for ailing chocolatier Thorntons as the group was hit by intense competition and shattered consumer confidence.

The firm, which has 579 stores in the UK, warned just before Christmas that pre-tax profits would be around break-even in the year to June, compared with £4.3m in the previous year, and is expected to reveal a further slump in sales on Thursday.