Tesco records highest market share since 2016 after strong festive sales

It said sales over its third quarter before the Christmas period lifted 2.8 per cent across the 13 weeks to November 23, with sales up 3.1 per cent in total over the 19 weeks to January 4.

Tesco said it benefited from investments in prices as customers switched to the chain, with recent industry figures from Kantar showing its market share reached a nine-year high of 28.5 per cent in the 12 weeks to December 29.

It said it remained on track with recently upgraded full-year profit guidance for around £2.9bn in retail underlying earnings.

But the sales growth is lower than the 6 per cent growth it notched up the previous Christmas.

Ken Murphy, chief executive at Tesco, said: “We invested to bring the best value, quality and service to everyone, no matter how or where they shopped with us.

“As a result, we delivered our biggest ever Christmas, with continued market share growth and switching gains.”

Richard Hunter, Head of Markets at interactive investor, commented: “Tesco still rules the roost in the British aisles, following another robust trading period which included further gains in its market share to consolidate its dominant grocery position."

"Retail like-for like-sales rose by 2.8 per cent over the quarter and by 3.8 per cent over Christmas, with any number of eye-catching performances underpinning this growth.”

He added: “While Tesco continues to flex its muscles in a notoriously competitive environment, expectations also progressively increase, lessening the likelihood of positive shocks for investors.

"The share price reaction to the numbers could relate to a tinge of disappointment that guidance was not expanded following the festive success, even though the sales numbers were largely in line or ahead of expectations.”

“Nonetheless, the momentum has been positive of late for Tesco, where the shares have risen by 22 per cent over the last year, as compared to a gain of 7.4 per cent for the wider FTSE100.

"This feeds into a gain of 53 per cent over the last few years, leaving a valuation which is more indicative of the strides which the group continues to make.

He added: “Regardless of the fact that investors have given a cool reception to the update, the longstanding market consensus of the shares as a strong buy and the preferred play in the sector is unlikely to waver.”