Tesco snaps negative trend with Irish Christmas sales

Tesco said its Irish sales "turned positive" over Christmas , following better trading over the preceding year. The improvement came as the retailing giant reported a better -than-expected group result for the festive period, suggesting it may finally be recovering after years of turmoil.

“Our like-for-like sales performance in the Republic of Ireland turned positive over the Christmas period to 2.9 per cent following an improving trend in sales and volume through the course of the year,” the company said in a trading update.

Irish customers are, Tesco said, responding to investments it has made, particularly in moving to “lower, more stable prices on hundreds of key lines.”

Tesco has been fighting a harsh battle in Ireland and elsewhere against German supermarket chains, Aldi and Lidl as well as the enlarged Supervalu chain.

The most recent market share figures from Kantar Worldpanel showed that Supervalu had 24.7 per cent of the market, while Tesco had 24.1 per cent. Dunnes Stores held 23.8 per cent and Aldi had 8.4 per cent.

"There is plenty more to do, but we are making good progress and are trading in line with profit expectations for the full year," chief executive Dave Lewis said of the group's overall performance.

The Christmas period for Tesco is defined as the six weeks ending January 9th. For the 19 weeks up to the same date, Irish like-for-like sales were 0.2 per cent stronger, while they were 1.2 per cent weaker for the third quarter. This marks an improving trend, with comparable drops for the previous two quarters standing at 2.9 per cent and 4.4 per cent.

UK stores

The firm said sales at UK stores open over a year rose 1.3 per cent over Christmas, compared with analyst forecasts of a fall of 1-3 per cent.

It said its volumes rose by 3.5 per cent and transactions by 3.4 per cent as more customers chose to shop more regularly at the supermarket which had previously dominated the British high street for decades.

Tesco said its move to cut prices had made a big difference while 4,000 additional ‘Here to Help’ staff and a strong Christmas offering had drawn customers back.

Tesco also provided an update on its trading for the 13 weeks to November 28th, its fiscal third quarter, where like-for-like sales in its home market fell 1.5 per cent, which was also better than expected.

Tesco’s share price hit an 18-year low last month as investors fretted over the pace of progress under Lewis but they had edged up in recent days as industry data suggested it may have enjoyed a stronger Christmas period.

Analysts welcomed the news and said the group needed to now show it could translate the stronger trading into improved profitability.

“This is a useful tick in the box for Tesco, generating good growth despite a more disciplined and less promotionally fuelled trading approach year on year. It offers some hope that the business might be able to deliver sustained volume growth,” said analysts at Stifel in a note.

Reuters