THE UK’s biggest retailer Tesco celebrated a resurgence in its fortunes yesterday with the highest Christmas sales growth in three years.
The group, which announced poor UK trading this time last year, said British like-for-like sales rose 1.8 per cent in the six weeks to January 5, beating Sainsbury’s 0.9 per cent growth and Morrisons’ 2.5 per cent decline, although the time periods were not identical.
Yesterday Sainsbury’s and Tesco were involved in a spat over Tesco’s decision to include Clubcard vouchers in its like-for-like sales.
Sainsbury’s said Tesco’s growth would have been 1.4 per cent if the coupons weren’t included.
Tesco insisted that its £1bn turnaround plan is starting to work.
The world’s third-largest retailer believes it is gaining strength after last year’s profit warning – the first for 20 years.
It also announced the appointment of Chris Bush, former UK chief operating officer, as managing director to run the UK business.
Tesco’s chief executive Philip Clarke took direct control of the UK business last March after ousting Richard Brasher.
“In the UK I think we were back on form, but we need to keep our feet on the ground. This was only a six-week period,” said Mr Clarke.
The outcome was driven by a stronger food performance and an 18 per cent rise in online food sales.
General merchandise was a drag on sales growth.
Tesco’s figures were boosted by easy comparative numbers. In the same six-week period of its last financial year like-for-like sales fell by 2.3 per cent.
Tesco has suffered more than rivals,partly because it sells more non-essential non-food goods.
Mr Clarke launched his strategy to revive UK sales in April, investing in more staff, revamped food ranges, refined marketing and smartened stores that give more space to food.
“My job is to set the vision and the strategy together with Chris,” he said.
“It will give me a bit more time to dedicate to my other responsibilities, running a group on three continents,” said Mr Clarke.
With consumer price inflation running at 2.7 per cent, Tesco is still seeing negative real growth in the UK.
Industry data from Kantar on Tuesday showed Sainsbury’s posted the highest sales growth of the big four in the 12 weeks to December 23 and was the only one to raise its market share.
Analyst Sam Hart, at Charles Stanley, said: “Our expectation is that trading conditions in UK Food Retail will remain challenging over the medium term, with the consumer continuing to experience pressures and the competitive landscape intense.
“We are encouraged, however, by the relative improvement in Tesco’s like-for-like sales performance in the UK.”