Tesco has reported a dominant festive trading period, propelling its UK market share to its highest level in over a decade, even as its share price experienced a sharp decline on Thursday morning.
Festive Sales Surge and Profit Guidance Upgrade
Britain's largest supermarket group revealed that total group sales hit £24.9 billion for the 19-week period covering the crucial third quarter. Chief Executive Ken Murphy expressed delight at the "strong Christmas" performance, which was powered by significant growth in its premium Tesco Finest range and party food.
Sales of the Finest line grew by an impressive 13%, with festive party items specifically soaring by 22%. This robust performance has led the FTSE 100 giant to anticipate its full-year adjusted operating profit will reach the upper end of its previously forecast £2.9bn to £3.1bn range.
Market Share Milestone and Regional Performance
The most striking figure from the update is Tesco's swelling UK grocery market share, which has risen to nearly 29%. This marks the supermarket's highest share in more than ten years and represents 32 consecutive periods of year-on-year gains.
Beyond the UK, the Republic of Ireland saw strong food sales growth of 5.2%, driven largely by fresh food. In Central Europe, like-for-like sales increased by 2.3%. The company's digital channels also flourished, with online sales growing at a double-digit rate and its on-demand delivery service, Whoosh, attracting over 250,000 new customers.
Share Price Dip Amid Booker Weakness
Despite the positive operational update, Tesco's share price fell by nearly 5% in early Thursday trading. Analysts attributed the drop to a less-than-hoped performance in its wholesale business, Booker, which has been impacted by a long-running decline in tobacco sales.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, noted that while the business continues to execute well, the market had been hoping for a more significant upgrade to profit guidance. "The net effect was that the supermarket chain only nudged its full-year underlying operating profit guidance to the top end," he explained.
Murphy acknowledged the ongoing competitive intensity, stating that "value remains a priority for customers." However, Chiekrie highlighted the company's strong cash generation, suggesting it is well-placed for future investment. "For investors looking for a long-term buy-and-hold, Tesco should certainly make it onto the potential shopping list," he concluded.
