Tesco adds to festive cheer on High Street
. . . but Asos and Halfords lose out
TESCO boss Ken Murphy said shoppers are ‘cautiously optimistic’ about 2023 as it celebrated a bumper Christmas.
The UK’s biggest grocer said sales jumped 7.2pc in the six weeks to January 7.
Marks and Spencer also toasted a successful Christmas as shoppers brushed off the economic gloom. The pair are just the latest to report bumper festive figures following the likes of Next, Sainsbury’s, JD Sports, Aldi and Lidl.
AJ Bell investment director Russ Mould said: ‘It feels like retailers are doing better than feared, with some notable exceptions.’
The UK’s grocers were boosted by families celebrating their first restriction-free Christmas since the pandemic struck.
And fashion firms, such as Next, JD and Primark, benefited from a drop in online shopping as customers flocked back to stores. But in a sign some firms lost out, some retailers unveiled falling sales.
Fast fashion firm Asos saw sales dip 3pc in the last four months of 2022. Despite that, shares jumped 20.9pc, or 122.5p, to 708.5p as investors pinned hopes on a turnaround.
N Brown, the online retailer behind Simply Be and JD Williams, saw sales dip 7.6pc in the final quarter of 2022. And online wine retailer Virgin Wines posted a profit warning after what boss Jay Wright called a ‘disappointing’ end to the year. Shares crashed 24.1pc, or 17.5p, to 55p.
Halfords crashed 18.7pc after a shortage of mechanics and weak demand for tyres hit its autocentres while bike sales remained subdued.
Shore Capital retail analyst Clive Black said: ‘There are going to be losers.’ He added: ‘In terms of Christmas in the UK, people have been much more careful with how they spent. But on the back of that, they have not been together for three years so in terms of the retail spending cake, the supermarkets are the big winners. The money people had available, they decided to eat and drink.
‘Online has really suffered and the pure-play online retailers have been exposed.’ Tesco said it snapped up shoppers from its traditional rivals, stemming losses as some customers switched to Aldi and Lidl.
It was engaged in a fierce price war with the German discounters, and said it put on its ‘most competitive’ offering, with more than 600 products included in its Aldi price match campaign.
The supermarket, which controls a mammoth 27.5pc of the sector, said it would hit its target, with profit for the year to the middle of April of between £2.4bn and £2.5bn.
Tesco shares rose by 0.9pc, or 2.3p, to 246p. Boss Murphy said: ‘ In terms of trends for 2023 we’re seeing customers express sentiments of cautious optimism.
‘ Customers are weathering the storm, we’re in a full employment market, I think the sense is that maybe the recession will be a little shallower than maybe people were thinking, so there’s a little bit of cautious optimism.’
‘Online has really suffered’