Tesco beats forecasts with strong British Christmas sales

It fought back over the Christmas period by lowering prices and hiring more staff. The supermarket hired an additional 4,000 staff and focused on a strong seasonal display of goods. The company said it is making good progress and are trading in line with profit expectations for the full year.

Shares in Britain’s biggest retailer rose 5% to 166p as it revealed a 1.3% rise in sales at established United Kingdom stores in the six weeks to 9 January.

Across the entire third quarter, however, like-for-like sales were down 0.5% and 1.5% in the UK.

If a slowdown in Aldi and Lidl’s sales growth developed, that could prove a spot of welcome respite for Tesco and an opportunity to build from here to protect its market share, but the resilience of the discounters isn’t the only difficulty on the horizon.

Tesco PLC (LON:TSCO)’s stock had its “hold” rating reaffirmed by Societe Generale in a research report issued to clients and investors on Thursday, AnalystRatings.Net reports. However, group sales for the quarter were down 0.5%. Tesco and the other “Big Four” supermarkets (Sainsbury’s, Morrisons, Asda) have been forced into a price war, which has hit sales as they slash prices.

The broker said it has now set a “Neutral” rating on shares of Tesco PLC with a price target of 166.

Tesco saw sales over the three months to January drop in its largest stores as competition from smaller stores and online shopping hotted up.

But he said: “This idea that big stores are a weight around our neck or some sad dinosaurs clearly hasn’t been the case”.

There was also improved performance in Ireland with like-for-like sales climbing 2.9% over the Christmas period and edging down only 1.3% in the third quarter as the group continued to invest in pricing to improve its competitiveness. “We are more competitive than a year ago… what we have been doing is focusing on the Tesco offer being better for Tesco customers and that’s led more people to shop at Tesco… there’s much more to do but a positive step in the right direction”, added Lewis.