Tesco posts surprise 1.3% rise in sales over Christmas

Tesco sales were up over the Christmas period.

Tesco sales were up over the Christmas period. - Credit: PA

Tesco has delivered the latest cheer from the embattled supermarket sector as it posted a surprise rise in sales over Christmas.

The UK’s biggest grocery chain hailed a “strong Christmas” after revealing a 1.3% rise in UK like-for-like sales over the six weeks to January 9.

Shares jumped 5% higher after the update beat expectations, with some City analysts having pencilled in a sales fall of nearly 3%.

Experts said the figures give further signs that the turnaround being led by chief executive Dave Lewis is working.

The update comes after better-than-forecast figures from rivals Morrisons and Sainsbury’s earlier this week, pointing to a robust Christmas for the major players despite tough conditions in the sector.

Tesco has been battling to halt a decline in sales in the face of stiff competition from German discounters Lidl and Aldi, while the sector has also been waging a fierce price war.

Its third quarter figures for the 13 weeks ending on November 28 highlight the tough conditions, with group like-for-like sales down 0.5% and the UK figure down 1.5%, although the domestic performance was hit after Tesco scrapped its “£5 off £40” promotion held in 2014.

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But Mr Lewis said: “Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products.”

He added: “There is plenty more to do, but we are making good progress.”

Analysts at Bernstein said: “Sales turning positive over Christmas is a great result for Tesco and, combined with the strong performance in its international business, suggests that the company is well on the way to recovery.”

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “With its competitors already having provided some pleasant surprises, Tesco has completed the supermarket sweep with an update which has highlighted a particularly strong Christmas trading period.”

Sainsbury’s reported a better-than-feared drop in like-for-like sales of 0.4% lower in the 15 weeks to January 9 on Wednesday, although it did not break down the figures for the final Christmas weeks.

Tuesday saw smaller rival Morrisons delivered a surprise 0.2% rise in sales for the nine weeks to January 3 - its first festive sales increase for four years.

Asda, which is owned by US giant Walmart, does not report on Christmas trading until its fourth quarter figures are released next month.

Tesco said it attracted more shoppers and sold more items, with transactions over the six-week period up 3.4%.

It said lower prices - of around 5% year-on-year on key items - and moves to add 4,000 additional “Here to Help” staff in stores helped the sales improvement.

Group-wide like-for-like sales rose 2.1% in the six weeks, thanks to a 4.1% surge in its international arm.

The result marks a welcome improvement after a grim couple of years, with Tesco uncovering a £326 million accounting black hole in autumn 2014 that plunged the group into crisis, while in April last year it reported a staggering £6.4 billion loss.

Under the revival plan being led by Mr Lewis, it has shut more than 50 unprofitable stores since the start of its financial year and shelved plans to open a further 49.

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