A solid Christmas performance at Tesco
Tesco's latest results were bang in line with City forecasts, with like-for-like sales up 3.5% in the seven weeks to 10 January. But it is receiving stiff competition from discount stores such as Aldi.
"It was billed as Tesco's worst Christmas for more than a decade," said Richard Fletcher in The Daily Telegraph. But take into account November's VAT cut, "and it was actually the worst performance since... last Christmas". Tesco's results were bang in line with City forecasts, with like-for-like sales up 3.5% in the seven weeks to 10 January. Last year it achieved 3.1%.
But with consumers ready to batten down the hatches, "it looks like it is going to be a very tough year ahead", said Andrew Higginson, the supermarket's outgoing finance director. Sales at discount stores such as Aldi rose 22% in December, providing stiff competition for Tesco's recently introduced "discount brand" line. Given that shoppers like consistency and simplicity, the new range could be the "first big mistake that Tesco has made in a decade", reckoned Planet Retail commentator Bryan Roberts.
But so far the initiative appears to be paying off, said Lex in the FT; witness the improvement in the group's Christmas sales from the previous quarter. Nor does the spurt in discount store sales "foreshadow a lasting structural shift". Aldi's market share rose from 2.6% in 2008 to 3%, "good for the year but hardly stunning after a decade and a half in the UK". And while Tesco might lag Sainbury's and Asda in sales growth at the moment, it is storming ahead abroad, with group sales up 11.6% in the Christmas period, thanks to strong international growth. "There are very few companies of Tesco's size," said David Wighton in The Times, "who can boast anything like that."
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
TSCO: 341p; 12m change 17%
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
MoneyWeek news quiz: How much could you get in car finance compensation?
The car finance scandal, inheritance tax, and house prices all made headlines over the past few days. Test your knowledge while reviewing this week’s top stories with MoneyWeek’s news quiz
-
The biggest fossil fuel financing banks – is yours on the list?
You may not know it, but your savings could be being used to finance the fossil fuel industry. We look at the banks with the best and worst climate policies.