Supermarket rivals both claim victory but comparing like-for-like sales is misleading when reported trading periods are different
There’s nothing like Christmas trading figures to bring out the seething rivalry between the big grocers. On Thursday morning it erupted, with a Sainsbury’s executive questioning Tesco’s like-for-like sales figures.
Sainsbury’s was undoubtedly feeling the heat, as its briefings led to the chief executive, Justin King, declaring the supermarket chain the “clear winner” of the Christmas trading period, one day before Tesco came out with apparently better sales figures.
The two chains report on different periods, making a straight comparison impossible. But – looking at the Christmas trading statements alone – Tesco enjoyed 1.8% growth in like-for-like sales, excluding petrol, in the six weeks to 5 January, while Sainsbury’s saw the same measure of sales tick up by 0.9%, in the 14 weeks to the same date.
But is it the same measure of sales? Sky News’s Mark Kleinman reported that in an email sent to food retail analysts a senior member of Sainsbury’s investor relations team points out that Tesco included sales where customers used Clubcard vouchers. That number does not meet accounting rules under international financial reporting standards (IFRIC) and much further down in the trading statement, Tesco reports the IFRIC-compliant figure of 1.4% sales growth.
Sources – presumably close to Sainsbury’s – told Sky News that if it had used the same accounting benchmark as Tesco and included sales using points under its Nectar loyalty scheme, its growth figure would have been 1.4%.
So, under IFRIC, Tesco enjoyed like-for-like sales of 1.4% over the six weeks to 5 January and Sainsbury’s 0.9%, over the 14 weeks to the same date. We know that Tesco’s like-for-like sales were actually declining up to November, so Sainsbury’s claim that it won Christmas may not be so far off the mark after all.
When it comes down to it, the row highlights the difficulty of relying on like-for-like figures, rather than profitability. But for that we will have to wait for the next round of reporting. In the meantime, it seems that the share prices continue to react to the headline numbers, with Tesco up by 2% at lunchtime and Sainsbury’s down by 0.5%.