Tesco Turnaround on Track

Christmas figures are very important for large supermarkets and Tesco's Christmas was better than expected and shows that the new CEO is making an impact. Recent news about Tesco's foray into specialist coffee shops is also encouraging as I understand that they intend to open in store soon and that is probably the way forward for these huge supermarkets, having small useful brand areas rather than bland "own label" clothes. The growth of online is also much better than expected. See below.


Group sales

Group sales in the six weeks to 5 January 2013 increased by 3.8% including petrol (3.5% at actual exchange rates) and by 3.9% excluding petrol (3.6% at actual exchange rates).
UK performance

In the UK, total sales including VAT and petrol grew by 4.2% and by 4.3% excluding petrol.

Like-for-like sales grew by 1.8% - our strongest rate of growth for three years. This was driven by a much stronger food performance than last year and a further improvement from the third quarter. Most of our efforts to date under our six-part plan to Build a Better Tesco in the UK have focused on food - and particularly fresh food - so this performance provides further encouragement that the delivery of the plan is on track.

Finest and Everyday Value both outperformed the business as a whole, with customers responding well to a much stronger seasonal offering in these ranges, in addition to the successful re-launch of Everyday Value in April last year.

Our general merchandise performance - both in-store and online - was better than in the third quarter but was still a drag on our overall rate of growth, with more to be done on refocusing the business on sustainable, profitable categories in the coming year. Clothing enjoyed a stronger period - again, both in-store and online - on top of positive performances in the last two quarters.

We saw a slightly lower contribution from net new space in the period, reflecting our reduced opening programme, although those new stores we have opened performed well.

We benefited from a strong online performance over the period, with online food sales growth of 18%. Over half a million food orders were fulfilled in the week before Christmas, with nearly 5% of these being picked up by customers choosing to use our drive-through Click & Collect service, which is now available at over 140 stores.

Tesco Direct sales were up by more than 16%, with Click & Collect once again proving a particularly attractive option for customers ahead of Christmas. Many customers chose to collect their orders from one of over 600 Express stores now offering Click & Collect, providing an even greater level of convenience.