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Unwanted gifts spoil Tesco's Christmas

Reuters  |  LONDON 

By Paul Sandle

(Reuters) - Tesco's trading missed forecasts as strong were offset by weak demand for items such as DVDs and computer games, showing that even Britain's biggest chain is feeling the strain as consumers curb their spending.

Market research this week had identified as a festive winner, but the group said lower of general merchandise and the collapse of a cast a shadow over a record week of trading before Dec. 25.

Britons, whose spending power has been squeezed by inflation, prioritised this and cut back on nearly everything else, industry data has shown.

agreed that shoppers were tightening their belts, echoing comments from rival on Wednesday.

"There is definitely some caution in the way customers are talking about the year ahead," Lewis said. But there were signs that higher inflation was "abating a little".

Tesco, 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.

Sainsbury's, Britain's second largest group, and fourth-ranked Morrisons, both this week beat forecasts for trading.

Shares in were trading down 4.2 percent at 1250 GMT, the second worst performer after Marks & Spencer, the high which reported a fall in like-for-like on Thursday.


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.

"In the week itself (...) we sold more than ever before at as we made our offer the most competitive it's been for many, many years," he told reporters.

Lewis's strategy to rebuild following an accounting scandal in 2014 has been based on increasing

has tightened its hold on the nation's market after the competition regulator last month cleared its 3.7 billion pound ($4.95 billion) takeover of

Lewis is scaling back in general merchandise areas such as entertainment, where customers are turning to digital alternatives, while focusing on categories like clothing.

However, competition is intense in the market, driven by German discount chains and Lidl, which increased total by 15 percent and 16 percent respectively over

Lewis said had passed on fewer price rises than the "big four", which also includes owned Asda, and discounters and in the year to date.

grew by 3.4 percent, and specifically by 3.7 percent in the six weeks before Christmas, Lewis said, but weaker 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 had taken "the shine off an otherwise outstanding performance for the period as a whole".

had to rebuild its for tobacco and some other products for its smaller stores in the middle of its peak trading period because of the failure.

said Tesco's like-for-like numbers were "very strong", but its overall could disappoint due to tobacco and general merchandise.

(Editing by Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 18:45 IST