Tesco slides despite strong food sales driving it to record Christmas

Tesco slides despite strong food sales driving it to record Christmas

Tesco slides despite strong food sales driving it to record Christmas

In terms of the retailer's third quarter sales specifically, like-for-like sales were up 2.3% in the United Kingdom, and by 3.3% in the Republic of Ireland, which Tesco said was the "highest rate of market share growth in the Republic of Ireland for five years".

Shares in Tesco were trading down 4.2 percent at 1250 GMT, the second worst performer after Marks & Spencer (MKS.L), the high street retailer which reported a fall in like-for-like Christmas sales on Thursday.

M&S chief executive Steve Rowe said it had been a "mixed quarter", with "a weak clothing market in October and ongoing underperformance in our food like-for-like sales".

Tesco and Sainsbury's have announced "best ever" Christmas trading periods, as Asda and M&S lose ground. "As a result, we carried more stock into the December sale", it said in its trading statement.

Total third-quarter sales in the United Kingdom dropped by 1.4 per cent to £2.9bn.

It was a record Black Friday for John Lewis, and sales at John Lewis Partnership, which includes Waitrose, rose to 2.5 percent.

James Grzinic, analyst at Jefferies, said: "Tesco's update confirmed a solid third quarter and Christmas, but not quite the dominant display expected by some".

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The group, which reset its strategy in November two months after Archie Norman joined as chairman, said clothing and homeware like-for-like sales fell 2.8 per cent in the 13 weeks to December 30th, its fiscal third quarter.

He said that but for October's unseasonable mild weather, M&S would have had a positive sales performance for clothing.

Online sales also suffered, with growth slowing to 3 percent, from 6 percent in its second quarter.

"Sales in clothing and home actually fell by the biggest margin, but in a market which is shrinking, that's more a reflection of wider economic trends", he said. It insisted both divisions saw better trading in the key Christmas weeks.

He added: "It is within food that many rivals have closed the gap on M&S in terms of innovation and premium ranges, while also putting M&S's prices in sharp relief".

Worldwide sales during the quarter declined 9.8 percent to 309 million pounds (416.6 million dollars), while M&S.com sales of 309 million pounds improved 3 percent.

According to Tesco chief executive Dave Lewis: "We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years".

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