Tesco reports small rise in Christmas sales

Tesco has reported the smallest rise in Christmas sales at UK stores open at least a year since the early 1990s, as Britain's…

Tesco has reported the smallest rise in Christmas sales at UK stores open at least a year since the early 1990s, as Britain's biggest retailer felt the impact of the economic downturn.

The supermarket chain, which takes about £1 in every £8 spent in British shops, said this morning sales at British stores open for at least a year, excluding fuel, rose 2.5 per cent in the seven weeks to January 10th.

That was an acceleration from the 2 per cent growth reported for the 13 weeks to November 22nd. Tesco said adjusting for the reduction in VAT sales tax, which came into effect in early December, growth on a comparable basis was 3.5 per cent.

However, group sales were up 11.6 per cent, boosted by 32.7 per cent growth in its international sales which includes the 117 stores that Tesco operates in the Republic.

The company refuses to provide a breakdown of  sales or profits for its Irish division. It claims a market share of almost 26 per cent in the Republic where it employs over 13,500 people.

Tesco employs 440,000 people in about 4,000 stores across 14 countries.

Britain's retailers are struggling as shoppers curb spending amid rising unemployment, sliding house prices and fears of a deep recession.

The British Retail Consortium said today like-for-like sales fell 3.3 per cent on the year in December, the biggest drop since the series began 14 years ago.

Analysts expect Tesco to report the weakest underlying sales growth of Britain's top four grocers this Christmas, partly due to its greater exposure to non-food lines which have been hit harder than food in the economic downturn.

Tesco's growth is also being held back as shoppers switch to its new discount range. The firm believes the extra custom the range attracts will eventually offset the hit to sales.

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Additional reporting agencies