Tesco emerges as a festive winner

Tesco celebrated a record Christmas
Tesco celebrated a record Christmas
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​Britain's biggest retailer ​Tesco ​celebrated a record Christmas​ after reporting a steep rise in sales over the critical ​festive trading period.

The supermarket giant said UK like-for-like sales rose 1.9​ per cent​ in the 19 weeks to January 6, driven by a strong grocery performance.

Tesco's turnaround under chief executive Dave Lewis ​appears to be​ firmly on track.

Mr Lewis said: "We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years.

"Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK."

Tesco ​reported​ its biggest ever sales week in the UK over Christmas, with 58 million customer transactions and 770,000 online grocery deliveries.

Food sales ​rose an impressive 3.4​ per cent​ on a like-for-like basis over Christmas​.

However, g​eneral merchandise ​like-for-like sales fell 0.6​ per cent​. This was partly due to lost tobacco sales, which the firm blamed on the collapse of wholesaler ​​Palmer & Harvey.

Mr Lewis added: "Incorporating Palmer & Harvey volumes and complexity during this peak period was challenging, resulting in lost tobacco sales across December and putting further strain into our distribution network, particularly post-Christmas.

"Whilst I am pleased to say these challenges have now been resolved, they took the shine off an otherwise outstanding performance for the period as a whole."

Supermarkets are battling rising costs linked to the Brexit-hit pound, falling consumer confidence and fierce competition in the sector as Lidl and Aldi continue their relentless march.

But Tesco said it is working with suppliers to mitigate inflation and Mr Lewis said consumers are still cautious​ ​about how they spend their money.

A​nalyst Clive Black at Shore Capital said: "We deem this performance from Tesco to be good in the big scheme of things, noting as we do the shine that​ ​Palmer & Harvey​ ​takes off the headline figures.

​"​We see Tesco Group as one that is now transformed from the dysfunctional and fragile business that CEO Dave Lewis came into in 2014.

​"​Following another good staging post in Dave Lewis' time in charge of Tesco, Shore Capital reiterates our ​'buy' stance on the ​g​roup's shares. We sense that the shares may take this update in its stride, given no upgrades, but the underlying progress is undeniable and the direction of travel clear.​"​