Tesco’s path to financial recovery has been further cemented after it recorded a steep rise in sales over the critical Christmas trading period.
According to its latest trading update, third quarter like-for-like sales in the UK grew by 2.3 per cent – representing Tesco’s eighth consecutive quarter of growth – and total sales grew 2.5 per cent.
Meanwhile, UK like-for-like sales during the Christmas period rose by 1.9% and total sales was up by 2.1 per cent, driven by a strong grocery performance.
This means for the overall 19 week period ending January 6, Tesco’s UK like-for-like sales enjoyed a 2.1 per cent uptick, while its overall sales in the country rose by 2.3 per cent.
However, when taking all of the Big 4 retailer’s international markets into account, total like-for-like sales grew by 0.6 per cent during that period, but overall sales enjoyed a 1.8 per cent uplift.
Nonetheless, the figures are a further proof that Tesco’s turnaround under chief executive Dave Lewis is on the path to success.
It is also good news for the retailer after facing controversy over its £3.7 billion acquisition of wholesaler and convenience store operator Booker – which was given the final approval from the Competitions and Market Authority just before Christmas.
“We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years,” Lewis said.
“Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK.”
Tesco said its biggest ever sales week in the UK was over Christmas, with 58 million customer transactions and 770,000 online grocery deliveries in one week.
Food sales grew 3.4 per cent on a like-for-like basis over Christmas.
However, there was a slowdown in general merchandise sales – it dropped to 0.6 per cent – which Tesco blamed on lost tobacco sales after the collapse of wholesaler Palmer & Harvey.
“Incorporating Palmer & Harvey volumes and complexity during this peak period was challenging, resulting in lost tobacco sales across December and putting further strain into our distribution network, particularly post-Christmas,” Lewis said.
“Whilst I am pleased to say these challenges have now been resolved, they took the shine off an otherwise outstanding performance for the period as a whole.”
As with other retailers in the UK, Tesco is battling rising costs linked to devalued sterling, falling consumer confidence and increasing competition from discounters Lidl and Aldi.
However, the company said it was working with suppliers to mitigate inflation and Lewis said consumers were still “cautious” about how they were spending their money.