Tesco: world-class giant scores again

published 15 January 2010

Tesco (LSE: TSCO) has done it again. The world's fourth-largest retailer was expected to struggle against its rebounding rivals this year. It actually produced the strongest Christmas performance in three years. Over the six weeks to 9 January, overall turnover jumped by 7.5%. British same-store sales, excluding petrol and adjusting for VAT, surged 4.9%. Analysts had expected just 3% growth. "Even when its unprecedented Christmas Clubcard promotional push is taken into account, like-for-like sales rose 4.2%," pointed out Garry White in The Daily Telegraph. Champagne sales alone jumped by 35% year-on-year.

What the commentators said

"Most of us made it to Christmas without losing our jobs," said David Wighton in The Times, "and celebrated by splashing out on half-price bubbly and some Tesco Finest king prawns." Meanwhile, international sales growth of 4.1% may not have been earth-shattering, said Allister Heath in City AM. But Tesco should be able to make "huge strides globally" in future, thanks to "the tricks it's learnt in the ultra-competitive UK arena".

"The pressure may have eased, but it's certainly not off," said Lucy Farndon in the Daily Mail. "Investors will want to see evidence the revival can be sustained." Enter retail banking Tesco's next growth area, said Neil Collins on Breakingviews. "Banks have never been so distrusted... and Tesco has the scale, reach and opportunity to change this business." In sum, said Heath, "it's one of Britain's few truly world-class corporate giants".