Festive sales jump at Tesco as turnaround gathers pace

● Like-for-like sales up 1.9% in Christmas period ● Wholesale arm falters as tobacco woes impact

Tesco emerged as one of the festive retail winners yesterday after unveiling a jump in comparable sales over the key Christmas trading period.

The group, the largest supermarket business in both Scotland and the wider UK, said like-for-like sales lifted 1.9 per cent in the six weeks to 6 January.

Tesco said the four weeks leading up to Christmas Day were particularly strong in the UK, helping it notch up a 2.3 per cent lift in third quarter like-for-like sales. On the same basis, festive food sales rose 3.4 per cent.

Dave Lewis, group chief executive, said the latest trading figures showed the group’s turnaround continued on track.

He said: “We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years.

“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.” Half a million kilos of fresh salmon were sold.

Tesco saw its biggest ever sales week in the UK over Christmas, with 58 million customer transactions and 770,000 online grocery deliveries in one week.

The only drag on performance was general merchandise, where total sales fell 0.6 per cent in the Christmas period amid weak demand for items such as DVDS and computer games.

Lewis said another factor in the division’s challenges was the collapse of the Palmer & Harvey tobacco supplier recently, which had “taken the shine off an otherwise outstanding(group)performance for the period as a whole”.

Tesco-watchers said it was clear from the update, and similar statements from Sainsbury’s and Morrisons this week, that consumers had prioritised food over non-food during the latest period.

Lewis said: “There is definitely some caution in the way customers are talking about the year ahead.” However, he added that Tesco, which has a 28 per cent share of the UK grocery market, had noted signs that inflation was “abating a little”.

The group has tightened its hold on the nation’s food market after the Competition and Markets Authority last month gave final approval to its £3.7 billion takeover of wholesaler Booker.

Lewis added that the update showed a “coming together” of more than three years of the turnaround strategy. Hospitality group Queensferry Hotels is investing £1.4 million in the renovation and expansion of its two four-star properties in Edinburgh and Fife, with support from the Bank of Scotland. Expansion works have already been completed at Keavil House Hotel, pictured, in Dunfermline, with the construction of a new bespoke restaurant, bar and terrace. The group is also set to build four new bedrooms at its Bruntsfield Hotel in Edinburgh, raising the total number to 70.