Marks & Tesco: Sales strong or weak, future looks bleak

Tesco is festive winner reporting record Christmas sales

Tesco is festive winner reporting record Christmas sales

In the ROI, third-quarter and Christmas sales climbed 3.3% and 4% respectively. Gains in the FTSE 100, however, remain capped, with retailers weighing on the index following disappointing results by Tesco (LON:TSCO) and Marks & Spencer (LON:MKS).

Britain's biggest supermarket Tesco delivered a solid performance, with United Kingdom like-for-like seasonal sales up 1.9%, driven by a strong grocery performance.

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

The four weeks leading up to Christmas Day delivered record sales and volumes in the United Kingdom, which helped it notch up a 2.3 per cent rise in third quarter comparable sales.

This helped to grow its share of turkey sales over Christmas, when more shoppers bought their main meat meal from Sainsbury's, according to the retailer.

Supermarkets Morrisons and Sainsbury's also suffered in the wake of the slump, drifting down 3.3p to 226.2p and 5.3p to 248.6p respectively.

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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.

CEO Dave Lewis' strategy implementation is yielding results - 2017 saw strongest Christmas sales since former head Leahy's departure in 2010 - however the negative reaction stems from United Kingdom like-for-like sales during the key period coming in at 1.9%, well shy of 2.8% consensus, weaker than even the lowest estimate of 2.0%. The hard discounter claimed to be the UK's fastest growing supermarket during the four weeks to 31 December 2017.

Shares were down 22.8p to 301.2p, as the retailer's woes were compounded by a 0.4 per cent sales drop at its food arm.

Same store food sales fell 0.4 percent - ahead of analysts' average forecast of a 1.1 percent decline but worse than a 0.1 percent fall in the previous quarter.

Marks & Spencer shares tumbled 22.8p, or 7.04pc to 301.2p.

Steve Rowe, chief executive of M&S, added: "In our food business, ongoing trading pressures continued in the lead-up to Christmas as consumer spending and choices reflected tighter budgets".

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