Tesco said sales in the six weeks covering Christmas and New Year were 4.1 per cent ahead of last year, if new selling space is stripped out. With Budgens reporting sales growth of 3 per cent over Christmas, the figures provided further evidence that while consumers have cut back on clothing spending they have not done the same with food and drink.
Tesco shares fell 8.25p to 187.25p on disappointment that the figures were not better. David McCarthy, food retail analyst at BT Alex. Brown, attributed the decline to profit taking after the stock had increased by more than 20 per cent in the past two weeks. He said Tesco was still ahead of the industry sales average, which was about 2 per cent over Christmas.
Tesco's relatively strong performance will also raise questions as to whether rivals such as Sainsbury's and Safeway may have been hit. Marks & Spencer has already reported a 1.6 per cent fall in UK food sales over Christmas in its disastrous profits warning last week. But William Morrison, the Bradford-based supermarket group, last week reported sales up 5.3 per cent over Christmas.
On the high street, New Look, the women's fashion retailer, offered some relief to battle-weary City investors. It said like for like sales in the 16 weeks to 16 January were down by 0.3 per cent on the same period last year. This was better than expected and New Look shares made up for falls in the past week to show an 8.2p gain to 142.5p.
Jim Hodkinson, chief executive, said the group has recently seen a "considerable improvement" in sales in recent weeks. Response to the winter sale has been good, the company said, leaving gross margins up on last year and no stock overhang as spring ranges start to come in: "This is an encouraging start to 1999 although it is clearly still too early to infer a trend."
Elsewhere, Style Holdings, which operates the Envy menswear stores, reported a 25 per cent surge in sales growth. This included new stores but the company said underlying growth had also been "very strong".Reuse content