Partly Cloudy

Partly Cloudy

max temp: 20°C

min temp: 12°C

ESTD 1874 Search

Retail: Tesco and Morrisons report slump in sales after a “challenging” Christmas

09:36 09 January 2014

Tesco and Morrisons have each reported a sharp fall in sales over the Christmas period.

Tesco and Morrisons have each reported a sharp fall in sales over the Christmas period.

Tesco and Morrisons both reported sharp declines in sales today after a “very challenging” Christmas for the supermarket sector.

shares

Market leader Tesco said like-for-like sales were down 2.4% in the six weeks to January 4, while a fall of 5.6% at Morrisons led the chain to warn that its profits will fall short of some City hopes.

The latest downbeat figures from the sector come amid recent market share gains for discount rivals Aldi and Lidl, although Sainsbury’s and upmarket rival Waitrose have reported increased sales for the period including Christmas.

Tesco blamed the weaker grocery market for its latest decline in UK like-for-like sales, although it said it still took £1billion in sales in the five days before Christmas, including its biggest ever trading day.

Unlike Morrisons, which has still to break into the online grocery market, Tesco said it generated £450million from internet shoppers over the six week Christmas period, up 14% on a year earlier.

Overall, Tesco said it remained on track to meet the City’s profit forecasts of between £3.1bn and £3.4bn for the year to April.

However, the disappointing sales update will increase the pressure on chief executive Philip Clarke’s £1 billion turnaround plan for the UK.

Tesco is scrapping more than 100 major UK store developments and focusing growth on convenience stores and its online offering, while also looking to transform stores into family-friendly retail destinations.

Mr Clarke said that with household incomes growing slower than inflation, families feel they have less to spend than they did last year and in previous years.

He added: “While families still treat themselves and parents always want to give their children a good Christmas, budgets remained constrained and optimism around the economy and house prices led to slightly more borrowing on credit cards.”

Morrisons said consumers had been managing their budgets very tightly and were shopping across a range of formats and retailers.

Itadmitted the Christmas period had been “very challenging”, with chief executive Dalton Philips adding: “In a very tough market our sales performance over Christmas was disappointing.”

Morrisons shares slumped 7% in early trading following the update which was described as “quite awful” by Clive Black, a retail analyst at Shore Capital Stockbrokers. Tesco shares were 2% lower following its Christmas update.

Related articles

shares

0 comments

The Willis building in Ipswich.

Around 200 people are to lose their jobs at the Ipswich office of global insurance broker and risk management group Willis.

The Great House restaurant with rooms in Lavenham.

An award-winning Suffolk restaurant has gained another accolade after being ranked the 26th best in the country.

Gavin Patterson, chief executive of BT.

Photo: BT

BT is to pay out up to £129million to extend the Government-led roll-out of superfast broadband, after a bigger-than-expected take-up of the service.

Centrica has reignited controversy over high energy bills by announcing a 44% increase in first half profits at its British Gas retail division.

Energy giants Royal Dutch Shell and Centrica today revealed plans to axe a total of more than 12,000 jobs.

Christopher Hayman of Hayman Distillers with his children Miranda and James.

Essex gin maker Hayman Distillers is celebrating after winning a Gold award at this year’s International Wine and Spirits Competition (IWSC).

Bakery chain Greggs saw like-for-like sales rise 5.9% in the six months to July 4.

Higher breakfast sales and a bigger range of healthier products helped Greggs grow underlying profits by 51% in the first half of the year.

Barclays chairman 

John McFarlane.
Photo: VisMedia

Barclays boss John McFarlane today signalled plans to ramp up growth, squeeze costs and streamline the business after announcing a 25% rise in first half profits.

Uncertainty over Government policy is holding back potential investment in the offshore wind sector, according to East of England Energy Zone director James Gray.

The absence of a clear Government stategy is leaving the offshore wind industry “in limbo”, according to a leading figure within the sector in East Anglia.

The rate of growth in the UK economy rebounded during the second quarter of 2015, but the manufacturing sector continued to struggle, according to official figures.

UK growth bounced back in the second quarter of 2015 as gross domestic product (GDP) increased by 0.7%, according to official figures.

Ransomes Jacobsen operations director Simon Rainger addresses staff as the company's last Ransomes Commander mover leaves the production line.

Staff at Ipswich-based turf maintenance machinery maker Ransomes Jacobsen have marked the end of an era, with the last Ransomes Commander mower having rolled off the production line.

Most read

Most commented

Topic pages