Tesco emerges as festive winner

M&S and John Lewis both take a knock

TESCO HAS emerged as a festive retail winner after unveiling a strong set of Christmas trading figures, whilst Marks & Spencer reported a downturn in sales and John Lewis warned that profits will be “substantially” lower this year.

Tesco, Britain’s biggest retailer, reported a 2.2 per cent rise in UK like-for-like sales in the six weeks to January 5, outperforming the wider market in all key categories – food, clothing and general merchandise.

Tesco said that its ‘Festive 5’ Christmas vegetable offer proved particularly popular with customers, selling 19.7 million packs over the three weeks to Christmas. Promotions on lamb and beef joints also helped drive sales.

Over the 19 weeks to January 5, the supermarket said like-for-like sales rose 1.2 per cent in the UK.

Chief executive Dave Lewis said: “In the UK we delivered significant improvements in our competitive offer and this is reflected in a very strong Christmas performance which was ahead of the market.”

The results come amid a difficult time for the retail sector, as consumer confidence takes a knock from Brexit worries.

Mr Lewis added that “sensible” Brexit contingency planning is under way and Tesco is working with suppliers to stockpile goods.

However, he sounded the alarm bell over fresh food.

“It’s hard to contingency for fresh food, where we can’t stockpile,” he said.

“Like other retailers, we’d be keen that there is no friction at the border given the UK imports half of the fresh food it eats.”

Supermarkets are battling rising costs and fierce competition in the sector as Lidl and Aldi continue their relentless march.

Tesco’s update is the latest from the big four supermarkets, which also includes Sainsbury’s, Asda and Morrisons.

Morrisons reported strong figures on Tuesday, while Sainsbury’s, which hopes to merge with Asda, posted a lower set of results on Wednesday.

Marks & Spencer said it is seeing “encouraging early signs” despite further falls in clothing and food sales over its Christmas quarter.

The retail bellwether said likefor-like clothing and home sales fell 2.4 per cent over the 13 weeks to December 29 while comparable food sales fell 2.1 per cent.

Total clothing and home sales fell by 4.8 per cent following a raft of store closures.

The group said while unusually warm weather and falling consumer confidence made for a “very challenging” November, overall trading in its third quarter was “steady with some early encouraging signs”.

M&S confirmed is it on track for its full-year profit guidance.

Chief executive Steve Rowe said: “Against the backdrop of well-publicised difficult market conditions, our performance remained steady across the period.

“Our food business traded successfully over Christmas as customers responded to improved value.”

John Lewis warned that its annual staff bonus is under threat as it battles challenging trading conditions. Around 83,000 staff are usually awarded the payout in March, but the retailer said it expects profits to be “substantially lower” this year.

Chairman Sir Charlie Mayfield said: “The board will need to consider carefully in March, following the usual process, whether payment of a bonus is prudent in the light of business and economic prospects at that time.”

The announcement came alongside the firm’s Christmas trading update, which saw the department store chain book likefor-like sales growth of 1 per cent in the seven weeks to January 5.

While fashion, beauty and womenswear performed well, the firm said profit margins remain under pressure in what is an “intensely competitive pricing environment”.

Comparable sales at sister chain Waitrose rose 0.3 per cent following a sharp reduction in the level of promotions.