The big supermarkets did better than expected at Christmas, although they still face huge challenges from competitors.
As the supermarkets report their results for the Christmas period it is clear that Lidl and Aldi continued to win custom from the ‘Big Four’, although there was finally some better news for long-suffering Tesco.
Over the festive period almost one in eight shoppers did their single biggest December shop in either Lidl or Aldi, according to market share research by Kantar Worldpanel. The last quarter of the year saw the two German discount brands visited by nearly 16 million households, up almost one million on the previous year, and giving them a 10% combined share of Christmas food spending.
Good news for Tesco at last
Tesco was the last of the ‘Big Four’ to report but it arguably had the best news of all, particularly for its long-suffering shareholders. They’ve seen the company’s share price nosedive from 251p last April to 144p in mid-December.
Tesco reported UK sales growth of 1.3% on a like-for-like basis in the six weeks to 9th January.
Chief Executive Dave Lewis said lower prices and more staff in stores meant Tesco was “making progress” and was “trading in line with profit expectations for the full year.”
Its shares jumped nearly 5% to 166p in early trading after the results were published.
[SPOTLIGHT]Richard Hunter, head of equities at investment company Hargreaves Lansdown, said: "With its competitors already having provided some pleasant surprises, Tesco has completed the supermarket sweep with an update which has highlighted a particularly strong Christmas trading period.
"The picture for the third quarter overall may make less positive reading, although a return to growth for the first time in four years is an achievement, albeit at an anaemic rate."
Morrisons surprises the market
Morrisons surprised the market by revealing a better-than-expected 0.2% rise in sales at established stores in the nine weeks to 3rd January. It was the first positive figure for the supermarket in four years.
The news led to a surge in Morrisons’ shares which rose 12% in early trading after the announcement.
Posh nosh boosts Sainsbury's
News from Sainsbury's was reasonable too. The firm reported that like-for-like sales in Q3 fell by 0.4%, which was slightly ahead of expectations.
Figures from Kantar show that Sainsbury’s had the best Christmas of the ‘Big Four’ with a 0.8% increase in sales for the three months ending 3 January. It holds 17% of the UK grocery market. Sainsbury’s premium Taste the Difference range is believed to have enjoyed its biggest ever Christmas sales.
Shares in Sainsburys rose as a result of its Q3 figures.
Asda suffers a blue Christmas
Asda is believed to have endured the worst Christmas with sales down 3.5% over the last three months of the year, according to Kantar. The Walmart-owned supermarket chain is also thought to have lost 0.6 percentage points of its market share taking it down to 16.2%. Wal-mart’s shares have been steadily falling since the start of the week.
More threats to the big players
“The outlook continues to look challenging for UK food and drug retailers as online retailers continue to test the big four, demonstrated by the likes of Amazon planning on launching a UK grocery service in the UK,” says Helal Miah, investment research analyst at The Share Centre.
So while this is a start it's going to be a long road back for long-term shareholders of the three big UK supermarkets.
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Additional reporting by Simon Ward
Image: JuliusKielaitis / Shutterstock.com
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