Tesco said sales rose by 1.8pc in the six weeks to January 5, ahead of the numbers reported by rivals J Sainsbury and Wm Morrison and suggesting the company emerged as one of the winners in the retail industry this Christmas.
However, a war of words erupted over the numbers after an executive at Sainsbury’s investor relations team sent an email to City analysts claiming that Tesco had inflated its like-for-like figures by including sales from Clubcard vouchers
The appendix on Tesco’s trading update showed that like-for-like growth fell to 1.4pc when voucher sales were excluded, which Sainsbury’s said was the same as their own performance over the six week period.
Despite the row, shares in Tesco rose by 6.25, or 2pc, to 355.40p.
Dave McCarthy, analyst at Investec (LSE: INVP.L - news) , said: “Tesco deserves credit for the improvement, but our industry concerns remain. The industry is going through a major transition, which is resulting in like-for-like volume declines and a fall in industry profits.
“As a well-known Tesco shareholder said: 'When bad markets and good management meet, it is bad markets that emerge with their reputations intact’.”
Philip Clarke, chief executive, said that Tesco was “on form” at Christmas.
After the profits warning last year, Mr Clarke launched a £1bn turnaround plan for the company’s UK business that involved hiring more staff, modernising stores, and launching new fresh food ranges.
This Christmas Tesco benefited from increasing sales of its own-brand food and clothing products, while online sales rose 18pc following investment in click-and-collect services.
However, Mr Clarke said Tesco still has a “lot more to do” to turnaround its UK arm, including a revamp of its non-food products.