Tesco set to triumph again in a festive retail game of two halves

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The Independent Online

Supermarket giant Tesco is set to confirm its dominance of the retail sector this week by un- veiling another bumper Christmas performance.

The chain updates the market on its trading on Tuesday, and underlying sales growth is likely to come in at close to 6 per cent after shoppers snapped up festive foods and presents.

As well as proving Tesco's continued popularity - despite well-publicised criticisms levelled at the chain - the update will confirm a strong Christmas for the entire grocery sector. J Sainsbury last week said that third-quarter sales had jumped 5 per cent, while Wm Morrison's sales soared by a better-than-expected 6.3 per cent, excluding fuel, in the six-week festive period.

Tesco is unlikely to better Morrisons' sales growth, but the Bradford-based chain is midway through a recovery programme, meaning that comparisons with Christmas 2005 work in its favour. Morrisons reported a rise in sales of just 2.8 per cent last Christmas, while Tesco enjoyed an increase of 5.7 per cent.

"When you are doing the sort of sales per square foot that Tesco is, there will never again be an easy comparative, so this year's performance is pretty impressive," said Jonathan Pritchard, retail analyst at Oriel Securities. Mr Pritchard is predicting sales growth of around 5.6 per cent. "All the evidence is that the food retailers have had a good Christmas," he said.

Shore Capital analyst Clive Black - who has a "buy" recommendation on Tesco's shares - added: "For the seven-week period to the end of the first week in January, we estimate like-for-like sales growth of 5 to 5.5 per cent." Mr Black also predicted a sterling performance overseas, with a 17.5 per cent jump in sales.

Other companies updating the market this week include DSG International, the former Dixons, and Comet-owner Kesa Electricals. Hopes are high that they will have benefited from high demand for flat-screen televisions.

But not all retailers will have good news to impart. "Without a shadow of a doubt, Tesco will deliver a strong trading update," said James Brown, head of retail research at the property group Donaldsons.

"But Christmas trading was divided into two halves. The success of companies like Tesco has been to the detriment of others. For Woolworths, the update isn't going to be particularly positive."

The general retailer said at the start of December that sales and footfall had fallen over the previous two months, prompting fears that Woolies was in line for a dire Christmas.

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