Tesco leads Big Four going into Christmas

In what analysts believed - and companies hoped - would turn out to be a repeat of last year's pattern consumers in the UK seemed to be saving until the last minute on spending on Christmas gifts, according to analysts at Jefferies.

Nevertheless, some retailers did better than others, although the next market update is expected to be particularly strong. Thus, discounters continued to grow share (given sales increasing by 14.3%). High-end operators also continued to outperform the Big Four.

Within the Big Four, food sales grew by 2.3%, versus 3.2% in October, while non-food sales dropped by 2.8% (compared to a three month average of 2.3%).

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As regards Tesco specifically, Jefferies said that it was approaching Christmas with the strongest trading momentum of the Big 4 (Tesco, ASDA, Morrison and Sainsbury): "The UK market leader has outgrown its UK major peers by 200bps (the biggest rate of outperformance recorded in any 4-week period for six years). Cash sales growth of 2.7% splits into very strong food increases of 5.2% and another major non-food decline (this time -9%)."

Even more interestingly, the broker added that, "Tesco was certainly promotional in November (and also helped by a soft comparable), but we also believe improvements in the execution are starting to pay off".

Lastly, those analysts highlighted that Tesco's above-par performance seemed to be hurting Sainsbury, while Morrisons trading remained poor.

As of 15:43 shares of Tesco are rising by 1.36% to 326.85p.

AB