Stock Market News
Tesco's festive sales fall shy of City forecasts
Tesco reported fairly strong sales growth in the run-up to and including Christmas, though still fell slightly short of City forecasts.
For the third quarter of the 13 weeks to 25 November, Britain's largest grocery group increased like-for-like sales 2.3% in the UK and Ireland, and then for the six-week festive trading period to 6 January, saw LFL growth of 2.0%.
The consensus forecast was for 2.4% for the third quarter and was even higher for the Christmas period at 2.8%, with some analysts expecting at least 3% for both.
Fresh food contributed a particularly good performance, with sales up 3.7% in the UK, while there was more than 5% growth in online grocery sales and a record Christmas period where over 4m customer orders were competed.
Group sales, including modest growth in Europe and marked declines Asia, were up 0.9% in the third quarter and up 0.1% over Christmas. Tesco had some issues with tobacco supply in the UK as the collapse of Palmer & Harvey affected total sales.
Ireland was bright spot with quarterly LFL sales up 3.3% and 4.0% over Christmas, while the performance in central Europe was solid as Poland delivered positive LFL sales and the Czech republic and Slovakia were said to be going well.
Directors are confident in the outlook for the full year and said the group remained "firmly on track" to deliver the medium-term ambitions, which are to reduce costs by £1.5bn, generate £9bn of retail cash from operations and improve operating margins to between 3.5% and 4.0%, all by 2020.
Following full regulatory clearance of the proposed takeover of wholesaler Booker, Tesco expects to send out its prospectus in the week beginning 5 February, a shareholder vote towards the end of February and completion in early March.
Tesco shares fell 3.8% in early trading on Thursday to 203.9p, cancelling out gains made since mid December.
"We deem this performance from Tesco to be good in the big scheme of things," said analysts at broker Shore Capital, noting that the collapse of wholesaler Palmer & Harvey took a shine off the headline figures.
"As such Q3 trading is in-line with our expectations, whilst 6W Christmas trade in the UK, stripping out P&H, is a little behind, circa 0.5%, noting as we do that Tesco mentions lesser inflation than its competitors in its statement, albeit all of the supermarkets seem to make this point," analyst Clive Black wrote.
Neil Wilson at ETX Capital said there was lots to be positive about, with stronger grocery and fresh food sales offsetting the less impressive performance in general merchandise and slower tobacco.
"As with all the supermarkets, while top line growth is seen, we have scant detail on margins and inflation. Inflation is undoubtedly helping to push up sales figures, but it is less clear where margins are," he added.
"The likelihood - as Tesco suggests in its update - is that it is better able to absorb inflation and pass less on to consumers than rivals, which ought to be positive for margins on a relative basis with competitors."
For the third quarter of the 13 weeks to 25 November, Britain's largest grocery group increased like-for-like sales 2.3% in the UK and Ireland, and then for the six-week festive trading period to 6 January, saw LFL growth of 2.0%.
The consensus forecast was for 2.4% for the third quarter and was even higher for the Christmas period at 2.8%, with some analysts expecting at least 3% for both.
Fresh food contributed a particularly good performance, with sales up 3.7% in the UK, while there was more than 5% growth in online grocery sales and a record Christmas period where over 4m customer orders were competed.
Group sales, including modest growth in Europe and marked declines Asia, were up 0.9% in the third quarter and up 0.1% over Christmas. Tesco had some issues with tobacco supply in the UK as the collapse of Palmer & Harvey affected total sales.
Ireland was bright spot with quarterly LFL sales up 3.3% and 4.0% over Christmas, while the performance in central Europe was solid as Poland delivered positive LFL sales and the Czech republic and Slovakia were said to be going well.
Directors are confident in the outlook for the full year and said the group remained "firmly on track" to deliver the medium-term ambitions, which are to reduce costs by £1.5bn, generate £9bn of retail cash from operations and improve operating margins to between 3.5% and 4.0%, all by 2020.
Following full regulatory clearance of the proposed takeover of wholesaler Booker, Tesco expects to send out its prospectus in the week beginning 5 February, a shareholder vote towards the end of February and completion in early March.
Tesco shares fell 3.8% in early trading on Thursday to 203.9p, cancelling out gains made since mid December.
"We deem this performance from Tesco to be good in the big scheme of things," said analysts at broker Shore Capital, noting that the collapse of wholesaler Palmer & Harvey took a shine off the headline figures.
"As such Q3 trading is in-line with our expectations, whilst 6W Christmas trade in the UK, stripping out P&H, is a little behind, circa 0.5%, noting as we do that Tesco mentions lesser inflation than its competitors in its statement, albeit all of the supermarkets seem to make this point," analyst Clive Black wrote.
Neil Wilson at ETX Capital said there was lots to be positive about, with stronger grocery and fresh food sales offsetting the less impressive performance in general merchandise and slower tobacco.
"As with all the supermarkets, while top line growth is seen, we have scant detail on margins and inflation. Inflation is undoubtedly helping to push up sales figures, but it is less clear where margins are," he added.
"The likelihood - as Tesco suggests in its update - is that it is better able to absorb inflation and pass less on to consumers than rivals, which ought to be positive for margins on a relative basis with competitors."
Related share prices |
---|
Tesco (TSCO) share price |
Stock News headlines are gathered from financial news sources around the web. Views and opinions on each item are from their respective authors and website. They are not opinions of LiveCharts.co.uk
Get a free widget for your website with our latest headlines.
You can now add our live prices and new headlines to your website.The news widget features quotes for Oil prices, spot Gold price and Indices plus a choice of news channel for healines.
Top Shares pages
- Share price quotes
- Share charts
- Share watch list
- Company Results Calendar
- Top Large UK Shares
- UK Market Sectors
- Stock market news
- Company news
- Share tips
- A-Z company search
More share features
POPULAR Share Prices
- Royal Mail share price
- Lloyds share price
- HSBC share price
- Barclays share price
- Prudential share price
- Santander share price
- NEXT share price
- Diageo share price
- BP share price
- Vodafone share price
- British Airways
- Centrica share price
- Tesco share price
- Taylor Wimpey Share Price
- National Grid
- GKP Share Price
- Marks and Spencer
- Rolls Royce
- Rio Tinto
- THG Share Price
- Aviva Share Price
- Boil Share price
- Easyjet Share Price
- Genedrive Share Price
- SSE Share Price
- IAG Share Price
- Boohoo share price
- HE1 share price
- AVCT share price
- BOOM share price