Tesco ground out a 0.1% rise in UK like-for-like sales over the Christmas period in what it described was a “subdued” market.
The figure for 6 weeks to 4 January 2020 was an improvement on the 0.4% decline recorded in its third quarter to 23 November, suggesting shoppers upped their festive spending after a belonged period of political and economic uncertainty. However, Tesco stressed that whilst Boris Johnson’s election victory had broken the deadlock, it had not yet released any significant pent up demand.
“In a subdued UK market we performed well, delivering our fifth consecutive Christmas of growth,” said Dave Lewis, the group’s outgoing Chief Executive. However, Tesco said the UK market had “clearly been challenging”.
The group claimed that its price competitiveness and promotions, including its first ever Christmas Clubcard offer, had attracted shoppers. Volumes over the festive period were said to have outperformed the market with a particularly strong showing in fresh food and new vegan ranges.
At Booker, like-for-like sales rose 5% in the third quarter. However, this figure weakened to 2.3% over the Christmas period with the group again blaming the tough trading conditions. Tesco added that its acquisition of Best Food Logistics was proceeding and it expects to complete the deal in early March.
In the Republic of Ireland, like-for-like sales rose 2% in the third quarter and by 1.9% over Christmas. Tesco stated that its ‘You Won’t Pay More’ campaign helped it deliver the positive sales growth.
Meanwhile, its central European business continued to perform poorly with like-for-like sales slipping 11% in the quarter and 9.1% over the festive period. Tesco stated that this was due to the ongoing transformation of the unit, which involves changing its approach in Poland and “re-sizing, simplifying and improving the relevance” of its businesses in the Czech Republic, Hungary and Slovakia.
The group’s operations in Asia, which were recently put up for sale, recorded falls of 1.6% and 1.4% over the two respective periods as it continued to “optimise” the mix of its product ranges.
Julie Palmer from consultancy Begbies Traynor suggested that Lewis would feel that he was leaving the company on solid foundations. “Despite the slump in sales for some of the UK’s Big Four supermarkets, Tesco has managed to remain robust during this precarious period,” she said.
NAM Implications:
- The big issue continues to be the rapid progress of the discounters and online/Amazon vs the mults ‘holding their own’.
- The mults are holding their own relative to one another, but slipping vs other competitors that are growing faster.
- This means suppliers have to rebalance their customer portfolios…
- ..or suffer dilution of sales medium/long term…
