Tesco Q3 sales growth ac­cel­er­ates on finest line

The Pak Banker - - Company& -

LONDON: Tesco Plc, the U.K.'s largest su­per­mar­ket chain, said sales in the peak Christ­mas pe­riod are ahead of its fore­casts af­ter do­mes­tic rev­enue growth ac­cel­er­ated in the third quar­ter on de­mand for Finest pre­mium foods.

Sales at U.K. stores open at least a year rose 0.7 per­cent to 0.8 per­cent, ex­clud­ing fuel and value-added taxes, in the 13 weeks ended Nov. 27, Fi­nance Di­rec­tor Lau­rie McIl­wee said to­day on a call with jour­nal­ists. That beat the 0.3 per­cent me­dian es­ti­mate of nine an­a­lysts sur­veyed by Bloomberg News.

The quar­ter ended with U.K. sales grow­ing at twice the pace of the over­all pe­riod, McIl­wee said. Tesco, which gets about two-thirds of sales in its do­mes­tic mar­ket, has ex­panded its Finest range, given more space to sea­sonal mer­chan­dise and dou­bled re­wards on its loy­alty pro­gram to win shop­pers. Gro­cer dis­counts are at record lev­els in the U.K., where Bri­tons are spend­ing less ahead of govern­ment-spend­ing cuts and tax hikes. "Tesco ex­ited the quar­ter strongly," Philip Dor­gan, an an­a­lyst at Altium Se­cu­ri­ties, said in an e-mailed note. The sales were "marginally bet­ter than ex­pected."

Tesco rose as much as 1.7 per­cent in London trad­ing and was up 5.05 pence at 425.05 pence as of 8:17 a.m. The shares are lit­tle changed this year.

Hol­i­day sales so far are "ahead of ex­pec­ta­tions," McIl­wee said. "This will be our biggest Christ­mas ever with more stores open and our strong­est-ever range," he said.

U.K. sales were boosted by a shift among con­sumers to­ward bet­ter qual­ity prod­ucts, in­clud­ing the Finest range, Tesco said. Same-store rev­enue from non-food prod­ucts rose 3 per­cent, helped by sales of a dress like one worn by Kate Mid­dle­ton af­ter the an­nounce­ment of her en­gage­ment to Prince Wil­liam. Sales at the Tesco Di­rect on­line unit surged 30 per­cent, McIl­wee said.

U.K. same-store sales, in­clud­ing value-added tax and ex­clud­ing fuel, was 3 per­cent as the quar­ter ended, com­pared with 1.5 per­cent for the en­tire pe­riod, the ex­ec­u­tive said.

"There's a good re­cov­ery go­ing on in the econ­omy, it's slow but steady," he said.

Snowy con­di­tions across the U.K. have had an im­pact on sales, par­tic­u­larly in Scot­land, ac­cord­ing to the fi­nance di­rec­tor. Tesco has 3,000 tons of grit and 150 quad bikes to clear snow from car park­ing lots, he said. Food-price in­fla­tion was 0.7 per­cent lower than in the pre­vi­ous quar­ter, McIl­wee said. A pace of 1.5 per­cent as an "exit rate" for this year "isn't a bad as­sump­tion," he said. In­ter­na­tional same-store sales climbed 4.1 per­cent in the quar­ter, led by growth in Asia. -Bloomberg

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