Tesco Reports Twelve Consecutive Quarters of Growth

Tesco has reported on third quarter and Christmas trading, advising of twelve consecutive quarters of growth.

Headlines (3Q: 13 weeks to 24 November 2018; Christmas period: 6 weeks to 5 January 2019)

• UK & ROI: Strong Christmas benefiting from an increasingly competitive offer for customers 
  
  • UK & ROI Christmas LFL sales +2.6%, outperforming market in UK in both volume and value terms 
    - Quality and value perception1 both up significantly year-on-year: +3.5pts and +4.5pts respectively 
    - Market outperformance in all key categories: food, clothing and general merchandise
  • UK & ROI 3Q LFL sales +1.9% reflecting transition to new own brands and subsequent resetting of mix in UK 
    - ‘Exclusively at Tesco’ roll-out 95% complete by end-3Q, with 82% of customers buying into the range
  • Booker delivering strong growth (LFL excl. tobacco: 3Q 10.7%; Christmas 8.2%); contract wins last year annualise early in Christmas period

Dave Lewis, Chief Executive:

“As a team we have achieved a lot in the last 19 weeks. In the UK we delivered significant improvements in our competitive offer and this is reflected in a very strong Christmas performance which was ahead of the market.

In Central Europe, the reshaping of our business continues and we are confident of the outcome we envisaged. In Asia, negotiations with suppliers are concluding satisfactorily and we can see this in our simpler, clearer, more impactful offer for customers.

We have more to do everywhere but remain bang on track to deliver our plans for the year and as we enter our centenary we are in a strong position.”

Trading Update

Like-for-like sales in the UK & ROI business including Booker grew by 1.9% in the third quarter and 2.6% in the six-week Christmas period.

In the core Tesco UK business, third quarter like-for-like sales increased by 0.7%, representing our twelfth consecutive quarter of growth. In a more challenging market, we made significant further improvements to our customer offer. Over 74% of our 10,000 own brand products had been relaunched by the end of the third quarter, with the roll-out of our ‘Exclusively at Tesco’ range 95% complete. As expected, and following a step-up in the marketing of ‘Exclusively at Tesco’, we saw an increase in customers trading into the exceptional value offered by these products. Whilst this, and the initial disruption as we rolled out the new ranges impacted the value of like-for-like sales, by the end of the third quarter overall UK sales volumes were outperforming the market.

This positive momentum continued into the Christmas period where we grew like-for-like sales by 2.2%, outperforming the market in both volume and value terms. Customers responded well to our market-leading seasonal proposition, with quality and value perception1 up 3.5pts and 4.5pts respectively year-on-year. Our highly competitive ‘Festive 5’ vegetable offer proved particularly popular with customers, selling 19.7 million units over the three weeks to Christmas. We also supported customers with relevant and timely promotions including half-price lamb and beef joints, which contributed to like-for-like sales growth of 12.2% in total meat joints, as well as repeating last year’s 25% off six bottles of wine.

Our online like-for-like sales increased by 2.6% over the Christmas period including our biggest-ever sales week in online grocery, with nearly 51 million items delivered and 776,000 orders. We have also seen a 3.8% year-on-year increase in Delivery Saver subscribers to 491,000, compared to Christmas last year.

In general merchandise the popularity of our exclusive Fox & Ivy homeware and Go Cook cookware ranges contributed to overall like-for-like sales growth of 7.7% in these categories during the 19-week period. This helped to partially offset an overall decline in general merchandise sales which impacted overall UK like-for-like performance in the period by (0.2)% as we continue to reposition our offer. Clothing sales increased by 3.8% during the period, aided by a particularly strong womenswear performance.

Like-for-like sales in the Republic of Ireland were flat over the 19-week period, against a strong performance last year. In a more competitive market, driven by increased couponing activity, customers responded well to our Christmas offer with positive volumes across key fresh categories.

Booker’s like-for-like sales grew by 11.0% (10.7% excluding tobacco) during the third quarter with sustained strong underlying growth. Like-for-like sales growth of 6.7% (8.2% excluding tobacco) during the Christmas period reflects the annualisation of contract wins last year. We continue to make good progress in our ‘Joining Forces’ programme with Booker, with Booker lines now available in 70 Tesco stores. We opened a new Booker distribution centre in Hemel Hempstead in December, which is now serving the vast majority of our One Stop stores with fresh and frozen products.

Source : Tesco

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