GlobalData: Tesco ends 2019 on a high as market leader delivers fifth consecutive Christmas of UK growth

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Following today’s release of Tesco Q3 and Christmas figures for FY2019/20, Thomas Brereton, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Dave Lewis’s final Christmas in charge of Tesco has undoubtedly been a merry one (at least, for its UK and ROI operations), which delivered marginally positive (+0.1%) actual sales change over the 19 weeks to deliver a fifth consecutive Christmas of UK growth. And while UK l-f-l sales fell 0.2% over the 19-week period as a whole, Tesco’s statement title of “strong performance in a subdued UK market” is spot on; considering the same figures for a similar period of -0.7% at Sainsbury’s and -1.7% at Morrisons, Tesco appears head and shoulders above its Big Four rivals going into the New Year.

“Tesco puts its success down to a focus on core groceries through price and promotions. While the headline UK sales performance includes a -0.4% impact from reduced general merchandise sales (with Tesco withdrawing from highly competitive non-food markets), much of the forfeited business has been recouped through savvy food offers (such as its Festive 5 vegetable offer) and targeted price reductions (claiming to having lowered a typical festive basket by £2.28 on last year). Moreover, Tesco describes reaction to its new Clubcard Plus scheme as “very positive”, and will likely have aided the grocer in augmenting performance at its larger out-of-town stores (although, confirmation of Clubcard Plus’s successes will have to wait until more detailed space analysis in its full-year results in April).

“All in all, when new CEO Ken Murphy arrives from Walgreens Boots Alliance in mid-2020, he will find (barring any nasty surprises) a carefully honed Tesco UK business running at the top of its game. While there is certainly work to be done on the international side (including a drastic reshaping in Central Europe and a likely sale of at least parts of its underperforming Asian business) the robust UK & ROI operation will afford him some breathing space to trial ambitious initiatives that its rivals may not be able to afford.”