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Tesco ‘disappointed’ with strained Christmas trading Thursday, 12th January 2012
“Despite record sales, we are disappointed with our seasonal trading performance” Philip Clarke, chief executive of Tesco Plc announced in a trading statement released on Thursday.
Group sales in the six weeks to 7 January increased 5.2 per cent including petrol (4.2 per cent at actual exchange rates) and by 4.0 per cent excluding petrol (2.9 per cent at actual exchange rates).
In the UK, total sales including VAT and petrol grew by 3.8 per cent and by 1.7 per cent excluding petrol. Net new space performed well, contributing 3.0 per cent growth, but the all-important like-for-like sales growth, at just 1.3 per cent including VAT and excluding petrol – came in below Tesco’s expectations. The supermarket added that the results were “disappointing, particularly in the context of the difficult weather conditions in 2010.”
“We delivered a very good Christmas shopping experience for our customers but in a highly promotional market, the volume response to our increased investment into lowering prices did not offset the deflation it has driven.” Clarke said.
In general merchandise, clothing and electrical departments, Tesco experienced growth overall, with an improved performance in electronics in particular being driven by strong sales of tablet computers and e-readers. Like-for-like sales remained below last year but, as the retailer pointed out, “at a much improved level compared with the first half.”
Online sales were strong in both food and non-food with total online sales growth of more than 14 per cent. According to the company report, close to one million orders were placed with Tesco Direct during the period, of which over two-thirds were collected in store.
On an global level, total international sales over the period grew at 8.2 per cent (5.0 per cent at actual exchange rates), with strong performances across Asia, Europe and the United States, where like-for-like sales at its Fresh & Easy stores grew 19.3 per cent.
"In a challenging economic environment, we made good progress internationally but despite record sales, we are disappointed with our seasonal trading performance in the UK.
Clarke added, We will continue the process of change that we started nine months ago to address long-standing business issues, building on the important steps we have already taken in the United States, in Japan and at Tesco Bank, as well as those we have begun to take in the UK. The Big Price Drop is an important first element in this process but there is much more we can do to further improve our shopping trip for customers and we are determined to move faster.”