Tesco shares rise 6pc after it pledges fresh price cuts

A NEW supermarket price war is on the horizon with Tesco promising a fresh wave of discounts for shoppers.

Shares rose more than 6pc as it beat City forecasts with strong festive trading – sparking new hope that Britain’s biggest grocer is on the mend. Chief executive Dave Lewis

(pictured) said: ‘There is further investment in price to be done.’

Tesco’s plan comes as Asda said it was planning to spend another £500m on bringing down prices.

The move will ratchet up pressure on discounters Aldi and Lidl which started the war.

Lewis also attacked rivals, accusing them of failing to deliver on promised cuts.

‘I have read so many headlines of “X-million invested” then struggled to find it,’ he said. ‘If I wanted to make big numbers up I can because of the size of Tesco’s business.’ Tesco (up 9.7p to 168p) said lower prices and 4,000 more staff providing better customer service were behind a 1.3pc sales rise in the six weeks to January 9.

This was better than a fall of 1.5pc that analysts had forecast. It did not give a figure for its online sales but said the international business saw a 4.1pc rise in sales. It said key lines such as turkeys, sprouts and mince pies were 5pc cheaper.

Lewis said the figures were not a turning point but ‘another step in improving Tesco’.

The grocer has lurched from crisis to crisis. It is being probed by the Serious Fraud Office for allegedly cooking the books under a previous regime, saw first-half profits halve and the share price fall 23.38pc.

Meanwhile, rival Sainsbury has fared better and is attempting to snap up Argos.

But John Walden, the boss of Argos owner Home Retail Group, defended its prospects as an independent business after it reported falling sales.

Home Retail yesterday revealed mixed Christmas trading: sales at its Homebase stores open more than a year rose 5pc compared with a 2.2pc fall at Argos for the 18 weeks to January 2.

Shares rose 3.3p to 152.7p.