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By Paul Sandle
LONDON (Reuters) - Tesco's Christmas trading missed forecasts as strong food sales were offset by weak demand for items such as DVDs and computer games, showing that even Britain's biggest supermarket chain is feeling the strain as consumers curb their spending.
Market research this week had identified Tesco as a festive winner, but the group said lower sales of general merchandise and the collapse of a tobacco supplier cast a shadow over a record week of trading before Dec. 25.
"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.
Shares in Tesco were trading down 4.2 percent at 1250 GMT, the second worst performer after Marks & Spencer, the high street retailer which reported a fall in like-for-like Christmas sales on Thursday.
FOOD, GLORIOUS FOOD
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.
Lewis is scaling back in general merchandise areas such as entertainment, where customers are turning to digital alternatives, while focusing on categories like clothing.
Food sales grew by 3.4 percent, and fresh food specifically by 3.7 percent in the six weeks before Christmas, Lewis 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".
(Editing by Keith Weir)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)