Tesco hails highest market share for more than a decade as festive sales rise

Supermarket Tesco has hailed its highest market share for more than a decade as it notched up a rise in festive sales despite “intense” competition.

The UK’s biggest grocery chain reported a 3.3% rise in UK and Ireland like-for-like sales over the six weeks to January 3, with growth of 3.2% in the UK and 3.8% across Ireland.

Sales over its third quarter before the Christmas period lifted 4% in the 13 weeks to November 22.

The group increased its share of the UK grocery market to 28.7% in the three months to December 28, which jumped to 29.4% in the key Christmas month, according to Worldpanel data.

The group said the strong Christmas performance meant it was now on track for annual profits at the upper end of its recently-upgraded guidance for between £2.9 billion and £3.1 billion.

But shares fell 6% in Thursday trading as festive sales growth fell short of market expectations.

It marked a slight slowdown on the 3.7% reported across the UK and Ireland business the previous year and the group said competition was fierce across the sector as the main players competed on price.

Tesco’s Booker wholesale business also saw sales fall 2.1% in the six-week Christmas period, worsening from a 0.9% drop in the third quarter.

Chief executive Ken Murphy said: “Our investments in value, quality and service drove further gains in customer satisfaction and strong growth in fresh food, contributing to our highest UK market share in over a decade.

“Competition is as intense as ever and we know value remains a priority for customers.”

He added that competitive activity in the market was “extraordinary”.

“It was relentless,” Mr Murphy added.

The group recently said it was bringing back its blue-and-white striped value logo as it ramps up its price war with German discounter Aldi.

Tesco said earlier this week the return of the blue-and-white stripes – which it dropped in 2012 – would “symbolise value at Tesco” and would be “front and centre of a major marketing campaign highlighting the low prices available on leading branded products”.

The group said it had its busiest trading days on December 22 and 23, adding that it was its biggest Christmas for online trading with sales on its website up 11.2%, with two orders every second in the weeks leading up to December 25.

It saw sales of its Finest range jump 13% as Mr Murphy said shoppers also looked to quality over the festive season, with party ranges up 22%.

The chain sold 21 million Finest pigs in blankets over the festive season, and said beef was the most popular alternative to the traditional Christmas turkey, with sales of beef joints up 29%.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Tesco continued to deliver for shoppers and investors alike this festive season, scooping up market share and increasing consumer satisfaction scores in an extremely competitive market.

“However, performance at its wholesale business, Booker, wasn’t as good as hoped due to the long-running decline in tobacco sales.

“The net effect was that Tesco only nudged its full-year underlying operating profit guidance to the top end of its current £2.9 to £3.1 billion range, while many had been hoping for a bigger upgrade.”