Nine months into a plan to overhaul the UK business and one year after its profit warning, Tesco’s (TSCO) Christmas sales figures look relatively underwhelming. In the six weeks to 5 January, group like-for-like sales excluding petrol were up 0.3 per cent. UK like-for-like sales excluding petrol and stripping out sales from clubcard vouchers were broadly in line with expectations, rising 1.4 per cent, boosted by better food and online sales.
But broker Seymour Pierce points out that while, on the face of it, UK sales were better than consensus expectations, it's a poor return considering Tesco has invested 1 per cent of its tight margin this financial year to achieve it.
The supermarket is also struggling internationally. Like-for-like sales in Asia and Central Europe continued to decline, falling 0.2 per cent and 3.6 per cent respectively, while in the US, where Tesco is reviewing its Fresh & Easy business, like-for-like sales fell 2.1 per cent. The group will update on the strategic review alongside final results in April, but a cut-price sale of the business is widely expected.
Management’s tone is cautious, saying its expects tough trading conditions to continue to the year-end, particularly in Central Europe.
