By Michael Northcott Thursday, 10 January 2013

Tesco pips Sainsbury's but M&S pales in Christmas sales race

For a while last year it looked as though Tesco had lost some ground, but now it is back on fighting form with its best Christmas sales for three years. Meanwhile, concern is growing about the state of M&S.

OK, fair enough, if you’re the country’s biggest retailer, your revenue figures will always dwarf those of your competitors. But Tesco also enjoyed 1.8% sales growth in the six weeks to 5th January, and that excludes new stores, VAT and petrol. 

The firm said that food sales had been particularly strong, and pointed to the ‘much stronger seasonal offering’ that it has rolled out to stores. In addition, online food sales jumped a massive 18% compared with the same period last year.

Bosses and investors with breathe a sigh of relief because last year Tesco was forced to report a 2.3% drop in sales and to concede that the fierce discounting in the groceries market had left it behind.

Chief executive Philip Clarke said: ‘I am pleased with our performance over the important Christmas and New Year period in the UK, which reflects the progress we are making in improving our offer for customers.’ He also pointed out that the online sales growth marked the firm’s biggest-ever week for online sales, in the week running up to Christmas.

Meanwhile, M&S suffered a drop in sales for the Christmas period. ‘Those results are a day early,’ we hear you say. That’s because one bright spark, Sky journalist Mark Kleinman, managed to get his hands on the figures before the due release date, and published them last night. Cue frantic 10pm conference call from a harried M&S. FT’s Alphaville has called Kleinman a ‘chump’ and pilloried M&S for flouting the Financial Markets and Services Act. After it responded at lightning speed with a statement.

Anyway, here are the figures. Like-for-like UK sales in the 13 weeks to 29th December fell 1.8% on the same period the previous year. Look at the separate product lines, and the picture looks worse: food sales rose a measly 0.3%, whilst general merchandise sales dropped a much larger 3.8%. 

Chief executive Marc Bolland said: ‘Our food business has performed very well with record sales over the key Christmas trading period,’ but he added that ‘our general merchandise performance is not yet satisfactory’. Unfortunately, Bolland, investors can’t help but agree with you. The share price was down 4.2% in morning trading.

This latest set of results will do nothing to help Bolland's credibility with those shareholders who are already worries he is not fit for the top job...

For financial results from other retailers, see MT’s coverage here. 

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