Tesco Xmas Sales Rebound As Customers Return

Tesco (Xetra: 852647 - news) 's sales over the six-week Christmas period improved as customer numbers increased and clothing sales saw a festive bounce.

Britain's biggest supermarket said UK like-for-like sales rose 1.3% in the six weeks to 9 January compared to the previous year.

Importantly for customers, prices for essential Christmas items were around 5% lower.

Tesco said that its clothing sales grew significantly ahead of the market with particularly strong performance in its ladies' fashion offering. Online shopping performed well resulting in a record number of orders being delivered on December 22.

Shares (Berlin: DI6.BE - news) rose nearly 5% following the update.

Chief executive Dave Lewis said: "Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products.

"Our customer service improved materially and our colleagues went the extra mile. Put simply, we put customers at the heart of everything we did and they responded by buying more of what they needed at Tesco.

"International sales have also continued to strengthen, driven once again by improvements across the offer. We continued our strong positive sales momentum in both Europe and Asia, with our Thai business reaching its highest ever market share."

The improvement for the Christmas period came after a tougher period, the third quarter to 28 November, details of which were given alongside the festive update. The 13 weeks saw UK like-for-like sales fell 1.5%. It (Other OTC: ITGL - news) meant that for the whole 19-week period, sales were 0.5% lower.

Tesco blames around two thirds of the UK's third quarter sales decline on its decision not to repeat the three '£5 off £40' national coupon campaigns which it ran last year.

Data earlier this week from research firm Kantar Worldpanel showed that Tesco's market share had fallen to 28.3% in the 12 weeks to 3 January, compared to the previous year.

Kantar also said that the amount spent on a typical Christmas dinner fell 2.2% – mainly due to cheaper poultry and traditional vegetable trimmings.

Britain's supermarket sector is engaged in a fierce price war as the big four - also including Sainsbury (Amsterdam: SJ6.AS - news) 's, Asda and Morrisons - come under pressure from discounters Aldi and Lidl.

But some analysts think there is signs of the tide starting to turn. Morrisons posted a surprise 0.2% sales rise for the Christmas period earlier this week, though Sainsbury's sales dipped 0.4%.