Christmas growth for Tesco as like-for-like sales rise by 0.7%

Britain's biggest supermarket Tesco (Frankfurt: 852647 - news) has delivered a Christmas sales rise but warned it faces pressure from the slump in the pound.

Shares (Berlin: DI6.BE - news) fell more than 2% in early trading as chief executive Dave Lewis said the retailer would try to mitigate the impact of sterling's collapse - which makes imported goods more expensive.

That was despite Tesco posting a 0.7% rise in UK like-for-like sales over the key Christmas trading period covering the six weeks to 7 January.

The supermarket said its fresh food offering outperformed rivals though non-food was held back by a scaling back in the group's Clubcard promotions.

However there was a strong performance for clothing and toys.

Tesco saw stronger growth in the 13 weeks to 26 November, when UK like-for-like sales rose by 1.8%, its eighth consecutive quarter of improvement.

That meant that over the 19 week period including Christmas, sales were up 1.4%.

Chief (Taiwan OTC: 3345.TWO - news) executive Dave Lewis said: "We are very encouraged by the sustained strong progress that we are making across the group."

He added that Tesco was working "shoulder to shoulder" with suppliers to help soften the impact of the fall in the pound on consumers.

That comes after it was last year involved in a stand-off with consumer goods giant Unilever (NYSE: UL - news) over the rise in prices of goods such as Marmite.

Mr Lewis said: "Inflation pressure is there, but we will keep doing everything we can to minimise the impact."

Industry data earlier this week showed supermarket prices started rising at the end of 2016, for the first time in more than two years.

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