Tesco and M&S report strong sales of Christmas foods

Retail giants Tesco and Marks & Spencer both saw a surge in food sales over the crucial Christmas period despite citing a challenging economic backdrop.

Tesco said sales in the UK were up 3.2% on last year and had now achieved its highest market share in more than a decade.

M&S said it saw record numbers of customers over Christmas and its food sales were “strong.”.

However, sales of its clothing, home and beauty business declined, with M&S attributing the decline to lower footfall on the high street and last year’s cyberattack issues.

M&S suffered a 2.9% fall in sales of its fashion, home and beauty products, which it said were also struggling with stock and inventory issues following the cyber attack.

Food sales rose 5.5%, which the M&S boss said was down to their “Christmas hero lines.” The company also cited its Italian ready meals, in-store bakery and deli as areas of growth.

Chief executive Stuart Machin said, “Food sales were strong and the business continues to perform well, achieving a new milestone in market share in the period.

“Fashion, home and beauty are back on track, as we hit the final stretch of the recovery,” she said.

Dan Coatsworth, head of market at AJ Bell, said the decline in fashion sales was “disappointing for a lot of people because the last few years have shown that M&S ​​has finally found the right formula for looking smart with clothes”.

He said rival fashion chain Next—which reported strong Christmas sales earlier this week— appears to have an “edge” that M&S lacked.

Tesco boss Ken Murphy said he was “delighted” with the supermarket’s performance amid “intense” competition over Christmas.

Food sales increased 5.2%, with particularly strong sales of fresh produce and party food, the firm said.

Murphy highlighted the performance of the Tesco Finest range, which saw sales rise by 13%.

The supermarket is now expected to report annual operating profit in October at the upper end of the estimated £2.9bn-£3.1bn range.

Tesco has seen consistently strong performance

“Tesco has seen consistently strong performance over the last few years, where its focus has really been on price,” said Sophie Willmott, associate director of GlobalData Retail.

He said that by price-matching Aldi and offering lower prices to its Clubcard holders, Tesco had “managed to retain its number one position at the top of the market”, despite heavily discounting some of its products to compete with rivals.

“It has also performed very well in its premium range, where shoppers may not be eating out as much or treating themselves as much,” he said.

Despite Tesco’s latest profit guidance, “many were expecting a big upgrade,” said Hargreaves Lansdown analyst Erin Chicory, adding that the group’s performance was dragged down by its wholesale business, Booker, which was suffering from a decline in tobacco sales.

That disappointment was reflected in Tesco’s share price, which fell nearly 5% in early trading.