Tesco has reported group sales growth of 0.5% in the third quarter of its financial year, with its UK & Ireland business up 1.9% for the period.
Tesco chief executive Dave Lewis has said that the business "delivered significant improvements in our competitive offer" in he UK, which is reflected in a "very strong Christmas performance which was ahead of the market".
Here's how leading retail analysts saw the group's performance.
Clive Black, Shore Capital
"Amongst a tumultuous five or six weeks for the British retail scene, characterised in market updates for some as distressing in the early part of December with arguably less dramatic disappointment in the New Year, Tesco has been a little under the radar, devoid of the spotlight.
"At the same time, until the recent pick-up, the Group’s shares after good absolute and relative performance in H1 CY2018 (+23%), notably disappointed in H2 (-25%), especially after the interim results in October when there was widespread investor frustration, we should say, about matters in Thailand in particular. So, this New Year update is a notable, largely refreshing and welcome addition to the Tesco investment thesis in our view."
Thomas Brereton, GlobalData
"Generally, all appears rosy at the UK’s largest retailer. The results also came with a string of successes: the almost-completed roll-out of the 'Exclusively at Tesco' range, quality and value perception amid customers up over Christmas, as well as Tesco’s biggest ever sales week in online grocery as it processed 776,000 orders.
"But the truth is that Tesco could be set for a very challenging 2019. While the markets will now have to wait until full-year results in a few months to see the exact impact on profit margins that discounting over the festive period has had, Tesco’s rivals are all taking a more active role in determining their position in 12 months’ time. Sainsbury’s are hedging bets with the pending mega-merger with Asda, and Morrisons are continuing to aggressively expand its successful wholesaler side of the business.
"And although Tesco displayed equal initiative with the acquisition of Booker and the unveiling of discount format Jack’s in 2018, bolder, more decisive actions are needed in 2019 to keep pace with the rate of change of the food market.''
Bruno Monteyne, Bernstein Research
"This performance is ahead of competitor results over the last two days: Morrisons Christmas period +0.6% and Sainsbury's Q3 grocery sales growth of +0.4% (this number also includes small positive space growth). Besides a good Xmas trade for us the most important data point is on page 2: at the end of Q3 (pre-Xmas), UK sales volumes were already outperforming the market. The fact that value growth is still below the market is explained by the transition to the new (cheaper) PL ranges.
"Tesco have highlighted better quality and service as the drivers of strong Christmas trading. This includes better availability in stores and an increase in both the quality and value perception. In addition, the roll out of Exclusively at Tesco range is 95% complete and was a driver of the better LfL in Q3 as customers are transitioning to the new own brands."
Catherine Shuttleworth, Savvy
"Tesco has had a great Christmas - out performing the market both in value and volume terms across all key categories of food and clothing. A very strong performance helped by the roll out of their exclusive only at Tesco brands. The stores looked great and the colleagues did an amazing job for their customers this year."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
