Tesco declared festive winner after strong in-store and online sales sparked surge in profits
Britain’s biggest retailer reported a 0.3% increase in like-for-like sales in the six weeks to January 8, compared to a year earlier, when trade was boosted by coronavirus lockdown restrictions . On a two-year basis, festive sales in the UK jumped 8.8%.
Third quarter figures showed UK comparable sales rose 0.2% while the wider group recorded growth of 2.4% in the three months and an increase of 3.2 % during the six-week festive period until January 8.
The group said better-than-expected trading put it on track to deliver full-year retail operating profit slightly above its previous forecast of between £2.5 billion and £2 billion. £6billion – marking its second upgrade in four months.
Tesco’s update comes after a series of retail updates earlier this week. Large rival supermarket Sainsbury’s said it was on track to beat profit targets thanks to better-than-expected sales of festive food and drink.
The UK’s second-biggest grocer, behind Tesco, said its overall sales fell in the last quarter, but pointed out that grocery sales increased in the key period around Christmas.
Tesco acclaimed its strongest market share in the UK for four years.
Managing Director Ken Murphy told investors: “Despite growing cost pressures and supply chain challenges in the industry, we have continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest festive range yet.
“This has put us in a strong position to meet customer needs as, once again, Covid-19 has led to a greater focus on celebrating at home.
“As a result, we outperformed the market, increasing our market share and strengthening our value position.”
Richard Hunter, Head of Markets at investment platform Interactive Investor, said: “Tesco has once again cemented its reputation as the UK’s flagship supermarket, boosted by a dominant performance at Christmas.
“In terms of market share, Tesco was the winner over the festive period, and the trend of accelerating online shopping vindicated its previous decision to increase capacity.
“Processing around 1.2 million orders per week online, this represents growth of almost 60% on pre-pandemic levels. It is also a clear indication that the range of alternatives that Tesco offers, in combination with its department stores and convenience stores, is one that the competition struggles to imitate.
John Moore, chief investment officer at Brewin Dolphin, the wealth management firm, said: “Tesco followed Sainsbury’s with a strong run of Christmas results against tough comparators last year.
“All cylinders are firing on the business: the main supermarket is increasing its market share, online sales are significantly ahead of what they were before the pandemic, its Booker wholesale arm is posting good quarterly growth helping to maintain overall performance, and the bank is benefiting from the actions carried out and from a favorable context.
“The share price has reacted positively since last year’s exceptional dividend,” he added.
Read more
Read more
Sainsbury’s profit targets on track after surge in festive sales, but Argos suffers…
