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By Paul Sandle
Market research this week had identified Tesco as a festive winner, but the supermarket group said a fall in general merchandise sales and the collapse of a key tobacco supplier cast a shadow over a record week of trading before Dec. 25.
The company, which has a 28 percent share of the British grocery market, reported a 1.9 percent rise in like-for-like revenue in the six weeks to Jan. 6. However, analysts had expected a rise of between 2.4 and 3.2 percent.
Shares in Tesco fell 4 percent at the open, and were trading down 3.5 percent at 0915 GMT, the second worse performer after Marks & Spencer, which reported a fall in like-for-like Christmas sales on Thursday.
Tesco Chief Executive Dave Lewis said food, and particularly fresh food, were driving growth across all the company's stores and online, with the company selling over 600,000 turkeys and half a million kilos of fresh salmon.
Tesco, which Lewis has overhauled following a 2014 accounting scandal, said it remained confident in its outlook for the full year and was firmly on track to deliver its medium-term ambitions.
Food sales grew by 3.4 percent, and fresh food specifically by 3.7 percent in the six weeks before Christmas, he said, but weaker sales in general merchandise were a 0.6 percent drag and the disruption in tobacco supplies took a 0.5 percent toll.
Lewis said the collapse of the Palmer & Harvey tobacco supplier had taken "the shine off an otherwise outstanding performance for the period as a whole".
It said that excluding the Palmer & Harvey impact would give Tesco Christmas like-for-like sales of 2.4 percent, better than Morrisons' 2.1 percent and about 2.0 percent for Sainsbury's, excluding its Argos acquisition.
The group also reported data for the third quarter, with UK like-for-like sales up 2.3 percent, having increased 2.1 percent in the second quarter.
(Editing by Keith Weir)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)