Tesco “rescues Christmas” and starts pulling in the right direction, says Kantar Retail

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmail

Tesco has reported a 2.9% decrease in like-for-like UK sales (excluding fuel) for the 19 weeks to 3 January 2015, compared to a decline of 5.4% in the second quarter. Over the key six-week Christmas trading period like-for-like sales declined by 0.3%.

Total UK sales, including VAT and fuel, declined by 0.7% in the period, compared to a decline of 3.2% in the second quarter.

Tesco has announced the appointment of Matt Davies, group chief executive of Halfords Group, as the new CEO for the UK and Ireland business, effective 1 June 2015.

It is closing 43 unprofitable stores and its Cheshunt head office, making Welwyn Garden City the UK and Group centre.

The company is also planning to close the company defined benefit pension scheme to all colleagues and dispose of Tesco Broadband and Blinkbox to TalkTalk.

Dave Lewis, chief executive, said: “We are seeing the benefits of listening to our customers. The investments we are making in service, availability and selectively in price are already resulting in a better shopping experience. A broad-based improvement has built gradually through the third quarter, leading to a strong Christmas trading performance.

“In difficult circumstances the team has begun the challenging task of reinvigorating our business. There is more to do but we have taken the first important steps in the right direction.”

Bryan Roberts, director of retail insights, Kantar Retail, said Tesco was making the right noises.

“Amidst this morning’s Tesco statement are a lot of nettles being grasped, notably concerning capex, the dividend, disposals of non-core operations, the long overdue head office rationalisation, store closures, the pension scheme and an evaluation of further options to maximise shareholder value, which possibly hints at some international moves,” he said.

“There are lots of bright spots too. By putting hours back on stores, Tesco rescued Christmas, putting in a very creditable performance with an encouraging direction of travel. Matt Davies is a left-field but excellent choice as new CEO of the UK and we are also heartened by volume gains in fresh food over Christmas, the decent showing from c-stores and online and today’s raft of price cuts. A long way to go, but Dave Lewis is pulling the business in the right direction.”