Strong food sales and rise in online shoppers drive Tesco growth and leave Sainsbury’s chief executive red-faced
Tesco beat City forecasts with news on Thursday of a 1.8% increase in Christmas sales, throwing into question Sainsbury’s claim that it was the “clear winner” of the festive trading period.
Strong food sales and a big increase in online shoppers helped drive Tesco’s like-for-like sales growth for the six weeks to 5 January to its strongest in three years. Analysts had expected a figure of around 1%. The performance beats Sainsbury’s 0.9% growth, excluding fuel, leaving chief executive Justin King red-faced after his suggestion it had beaten its key rival.
Tesco said its own brands – Finest and Everyday Value – outperformed the business as a whole. Chief executive Philip Clarke said: “This performance was driven by a further improvement in our food business in-store and a strong contribution from online, which included our biggest ever week for internet sales.” But he said conditions remained “tough”, particularly in central Europe.
Shoppers increasingly opted for home delivery over making the trek to crowded stores over the Christmas period. Tesco said online food sales grew by 18% in the six weeks to 5 January, and it recorded its biggest ever week for internet sales. The popularity of “click & collect” continued to grow, with nearly 5% of online shoppers opting for the service.
The company said general merchandise, in-store and online, was better than in the third quarter but still a drag on the overall rate of growth.
The company also announced the appointment of Tesco veteran Chris Bush as UK managing director, leaving Clarke to focus on heading up the group.