Tesco has recorded its “biggest ever Christmas” after achieving its highest market share since 2016.
Like-for-like sales in its UK supermarkets and convenience stores rose 4.1% over the six weeks to 4 January, with the group noting that it had continued to deliver volume growth ahead of the market. It also published third-quarter figures today for the 13 weeks to 23 November. Sales were up 3.8% during this period, meaning they had increased 3.9% over the full 19 weeks covering the last quarter and Christmas.
Tesco’s food sales over the Christmas season were up 4.7%, with a strong contribution from its fresh offering. Meanwhile, non-food sales (exc. toys) increased 4.0%, driven by both homewares and clothing.
Tesco rolled out around 350 new or improved Christmas products during the period, with it noting that its quality perception had risen 100bps and grown ahead of the market. Meanwhile, its premium Finest products proved popular as consumers traded up, with sales of the own label range climbing 15.5%.
Tesco also saw strong growth online, with sales up 10.8% and its market share increasing 122bps. It noted that it received over 1.2 million orders for its rapid delivery service Whoosh across the Christmas period.
In the Republic of Ireland, Tesco’s like-for-like sales rose 4.8% over Christmas and by 4.2% in the third quarter. The group continued to gain market share (+40bps) in the country, helped by fresh volume growth of 2.1% following the rollout of its ‘fresh first’ refresh programme.
At Booker, Christmas likes-for-like were up 1.4% after a 2.6% decline in the third quarter. Its core retail activities saw growth of 5.7% over the festive period, with its symbol brands said to have performed well despite a “subdued market backdrop”. Catering sales increased 5.0%, but tobacco (-6.1%) and Best Food Logistics (-4.1%) suffered significant declines in weak markets.
Meanwhile, in Central Europe, Tesco’s sales rose 4.7% during the festive period and by 2.8% in the third quarter, with a strong contribution from fresh food.
CEO Ken Murphy said he was “very proud” of the Tesco team and the Christmas performance.
He added: “We invested to bring the best value, quality and service to everyone, no matter how or where they shopped with us. As a result, we delivered our biggest-ever Christmas, with continued market share growth and switching gains.
“Our strong performance reflects the investments we have made, positioning Tesco as the UK’s cheapest full-line grocer for over two years, improving quality across all our ranges, with more than half of this year’s Christmas range new or improved, and providing the best experience for our customers in-store and online.”
Despite the upbeat trading update, Tesco shares fell over 1% in early trading. Murphy said: “It’s a little bit of travel and arrive. I think a lot of people had already kind of priced in the performance given the Kantar results that were published a few days ago.”
Analysts noted that the business also faces a gloomy economic backdrop and higher taxes this year after the Budget in October. However, Tesco said it continues to expect adjusted group operating profits to come in at £2.9bn, with Murphy stating it would “do its best” to mitigate the impact of the hike in employers national insurance and rise in the national living wage.
NAM Implications:
- i.e. Tesco fully reverted to peak form.
- And along with Sainsbury’s, piling more pressure on Morrisons and Asda.
- The key is the extent to which you achieved and maintained your fair share of Tesco’s performance.
- And where that leaves your trading strategies re Morrisons and Asda in 2025…
- But the really big question is whether Tesco has finally halted discounter market share growth?
