Tesco hails record Christmas but share price falls on missed forecasts

TESCO increased like for like sales by 1.9 per cent in a record Christmas performance, but with the UK’s largest supermarket missing forecasts its shares fell by 4.5 per cent yesterday.

Chief executive Dave Lewis talked up the performance in both the third quarter and the festive period, noting that Tesco “continued to outperform the market throughout this period”, but a fall in general merchandising sales dragged down momentum.

Tesco also had to cope with the collapse of its tobacco supplier, Palmer & Harvey, which led to lower availability. Mr Lewis said this “took the shine off an otherwise outstanding per for mance f or t he period”.

Analysts had expected like-for-like growth of 2.4 per cent to 3.2 per cent.

Fresh food was a big winner, up 3.4 per cent – including a 3.7 per cent lift in fresh food. The supermarket said all fresh categories outperformed the market during the Christmas period, with meat, fish and poultry cited.

For the third quarter overall, like-for-like sales were up 2.3 per cent, representing the eighth consecutive quarter of growth since Mr Lewis’ turnaround began to gain traction.

“Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK,” said Mr Lewis.

While Te s c o , l i ke Morrisons and Sainsbury before it this week, provided no details on margin, it made reference to ongoing inflationary pressures in its update to the markets.

Tesco said: “We have continued to work with our suppliers to help mitigate the impact on our customers. As a result, we have passed on less inflation to date than competitors.”