Tesco leads way as Christmas chill hits retail sector

Tesco led the pack of supermarket giants during a sluggish Christmas period that saw deep price cuts and some shops left deserted.

Britain’s largest grocer may even have increased its sales in a lacklustre December, leaving some of its main rivals in the shade, according to City predictions.

Christmas is a key month in the retail calendar and the end of a ‘golden quarter’ on which bosses are scrutinised.

Such a performance would be a relief to chief executive Dave Lewis, who wants to leave Tesco in good shape when he departs later this year.

Analysts said the group’s British shops delivered a ‘robust’ performance compared with stock market-listed rivals Sainsbury’s and Morrisons.

Cautious shoppers are understood to have made fewer trips to the shops in December amid political uncertainty around the Election.

Sources said Tesco may have benefited from the trend as shoppers focused on a few visits to its ‘Extra’ hypermarkets, rather than making several visits to standard-size supermarkets run by its rivals.

James Grzinic, an analyst at financial services firm Jefferies, predicted that like-for-like sales at Tesco rose 0.3 per cent in December, compared with the same period a year before, reversing a modest 0.6 per cent decline in the three months to November.

Sources in the City and food retailing sector said figures released tomorrow by Morrisons could reveal that its performance was the worst of the big supermarkets.

Grzinic has cut his profit expectations for the full year at Morrisons by 4 per cent as a result of concerns.

He added that some supermarkets had ‘pushed the promotional button hard’. Sainsbury’s is scheduled to report Christmas trading on Tuesday and Tesco the following day.

For the smaller food retailers, Shore Capital forecasts a ‘low single digit positive’ increase at Marks & Spencer’s food business.

It added that ‘the greater market focus is perhaps going to be to see if clothing and home could sustain positive October 2019 trade’.

Shore Capital’s general retail analyst Greg Lawless said: ‘The Election seemed to dampen the consumer mood until Friday December 13, with perhaps little chance of a fundamental uptick from less potential uncertainty for shoppers.

‘We expect unsurprising, lacklustre New Year trading.’

But he added: ‘All things considered, greater political certainty, less politics and potential economic stimulation, may just brighten the 2020 outlook.’

Source: This is Money

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