By REUTERS
Lower prices and more staff helped Tesco post a much better than expected result over the key Christmas period, suggesting Britain’s biggest supermarket chain may finally be recovering after years of turmoil.
Tesco, which has been wrongfooted by the seismic changes hitting the industry brought by the success discount groups Aldi and Lidl, said it grew sales in the 19 weeks to Jan 9, the first increase in over four years.
“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 on Thursday.
The firm said sales at UK stores open over a year rose 1.3% in the six weeks to Jan 9, compared with analyst forecasts of a fall of 1%-3%.
It said its volumes rose by 3.5% and transactions by 3.4% 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 Nov 28, its fiscal third quarter, where like-for-like sales in its home market fell 1.5%, 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.
You must be logged in to post a comment.