GlobalData: happy holiday for Tesco but more vigour needed in 2019

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Following today’s release of Tesco figures for Q3 FY2018/19 and the 2018 Christmas trading period, Thomas Brereton, Retail Analyst at GlobalData, a leading data and analytics company, comments: ‘‘Tesco began its 2019 centenary celebrations with a commendable set of Q3 and Christmas results today, with UK l-f-l sales increasing 1.2% over the 19-week period with Q3 representing the 12th consecutive quarter of l-f-l growth. Although falling food inflation, price promotions and lower fuel prices resulted in total sales declining by 0.4% over the same period, Tesco will consider itself one of grocery’s victors over Christmas – particularly after yesterday’s announcement of fall in l-f-l sales at rival Sainsbury’s over the Christmas period and negative sales growth at M&S food.

“So generally, all appears rosy at the UK’s largest retailer. The results also came with a string of successes: the almost-completed roll-out of the “Exclusively at Tesco” range, quality and value perception amid customers up over Christmas, as well as Tesco’s biggest ever sales week in online grocery as it processed 776,000 orders. Surprisingly for a supermarket, it also made the point of highlighting the successful performance of general merchandise and homewares ranges, giving a 7.7% l-f-l sales increase for its Fox & Ivy and Go Cook ranges.

“But the truth is that Tesco could be set for a very challenging 2019. While the markets will now have to wait until full-year results in a few months to see the exact impact on profit margins that discounting over the festive period has had, Tesco’s rivals are all taking a more active role in determining their position in 12 months’ time. Sainsbury’s are hedging bets with the pending mega-merger with ASDA, and Morrisons are continuing to aggressively expand its successful wholesaler side of the business. And although Tesco displayed equal initiative with the acquisition of Booker and the unveiling of discount format Jack’s in 2018, bolder, more decisive actions are needed in 2019 to keep pace with the rate of change of the food market.”