Relief for Lewis as Tesco sees sales grow for first time in a year

 

Tesco’s long, painful turnaround appears to be gaining momentum as yesterday’s supermarket data revealed that the struggling grocer had increased sales in January for the first time in 12 months.

The news will come as a relief for Dave Lewis, its chief executive, who is burdened by investigations by the Serious Fraud Office, the Financial Reporting Council and the Groceries Code Adjudicator into a £263m accounting scandal uncovered last year and alleged supplier abuse.

Tesco shares rapidly rose nearly 4 per cent to 241.85p as Kantar Worldpanel revealed that sales had increased by 0.3 per cent in the 12 weeks to 1 February, while Asda overtook Sainsbury’s to regain its place as the country’s second-biggest grocer.

Aldi’s and Lidl’s attack on the Big Four supermarkets has started to slow, although the German discounters continued taking customers away from Asda and Sainsbury’s.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Britain’s biggest retailer is bouncing back from a tough year, with Dave Lewis’s efforts to overhaul the supermarket attracting an additional 236,000 shoppers into its stores in the last 12 weeks.

“Despite the increase in sales, Tesco’s overall market share fell to 29 per cent, down by 0.2 percentage points compared to last year.”

Clive Black, a retail analyst for Shore Capital, said: “The Kantar data is good news for British grocers in that it records expansion after a sustained period of decline.

“Within that it is very notable that Tesco UK has recorded growth, noting favourable comparatives, and this should put a spring in the step of Dave Lewis for sure. The cut in branded prices in January seems to have gone down well with shoppers.”

However, some analysts said Tesco’s data was flattered by the Black Friday sales, which led to shoppers fighting over discounted televisions and appliances.

Investors were also heartened by the recovery at Morrisons, which is looking for a new chief executive. Its shares rose 5.8 per cent to 188.3p after  the industry data revealed that sales, though down 0.4 per cent, were the best since December 2013.

Sales at Aldi and Lidl grew by 21.2 per cent and 14.2 per cent respectively. But this was much slower than in earlier years. At the same point last year, Aldi was growing by 32 per cent and Lidl by 17.2 per cent. Mr Black said: “We have talked about the free lunch coming to an end for Aldi and Lidl and whilst still gaining share and so outperforming, the slowdown in momentum is also noteworthy.”

Elsewhere in the data, Waitrose boosted its sales by 7.2 per cent, staving off attempts by Aldi to overtake it as the UK’s sixth biggest retailer.

Kantar said that, by undercutting the market, Aldi and Lidl had helped drive grocery inflation down for its 17th successive period, knocking 1.2 per cent off average prices for the 12 weeks to 1 February.

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