Tesco boasts strong Christmas results

Tesco has reported a strong Christmas, boosted by the sale of more than 5.2m bottles of Champagne and Prosecco – but its market share slipped over the key trading period.

Trading in the six weeks to 9 January saw Tesco’s UK like-for-like sales up 1.3%, with volumes also up 3.5% and customer transactions rising by 3.4%. This followed slow trading in the 13 weeks to 28 November, where UK like-for-likes fell 1.5%. Christmas figures helped smooth trading over the 19 week period to 0.5%.

However, the latest figures from Kantar Worldpanel this week revealed Tesco saw its market share fall 2.7% in the 12 weeks ending 3 January 2016, slipping to 28.3%, as Lidl and Aldi continued to increase market share.

Chief executive Dave Lewis said there was more to do, but insisted the retailer was making good progress and trading in line with expectations on the back of “materially improved” customer service.

“Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products,” he said. “Put simply, we put customers at the heart of everything we did and they responded by buying more of what they needed at Tesco.”

Growth was reported in the Tesco Extra formats, as well as online and mobile orders through its grocery site.

Group sales during both periods were boosted by stronger international sales, with like-for-likes up 2.9% during Q3, followed by a strong Christmas, up 4.1%.

According to Kantar data out this week, drinks sales outstripped grocery sales in the key Christmas period. Sales of beers, wines and spirits were up 2.2% in the 13 weeks to 3 January compared to a 1.8% decline in food and grocery sales. Champagne and Prosecco saw a big boost, up 11%, it said.

In November, Tesco relaunched its sub-£10 Champagne offer in time for Christmas, with its Louis Delaunay Brut on offer for £9 per bottle – despite abandoning its half-price promotional strategy in favour of adopted a fixed pricing model more akin to that employed by discounters Aldi and Lid.

This followed a ‘reset period’ in which Tesco culled nearly a third of its wine range and laid out simpler, more transparent terms for its suppliers.