No Christmas joy for Tesco
Tesco has revealed the worst Christmas trading growth for over 10 years, but remains confident, promising new jobs and further price cuts.
The UK's largest supermarket group recorded like-for-like sales growth of just 2.5% in the seven weeks to January 10 - which The Times claims is the smallest rise in Christmas sales since 1993.
Tesco was quick to point out that it still achieved "record sales" in the face of difficult trading conditions and that, had it not been for the 2.5% reduction in VAT in early December, growth would have been 3.5%.
Some say that results suggest Tesco is losing ground to its rivals, with Sainsbury's reporting a sales growth of 4.5% last week, but analysts insist that Tesco's position in the market remains strong.
S&P Equity research analyst James Monro said that the multiple's performance was "in line with the Bloomberg consensus and our expectations", although "slightly disappointing" when compared to the performance of Sainsbury's.
"Nevertheless, we believe this news is reassuring and retain our view that Tesco is a defensive player in the sector, due to its cost-saving initiatives, economies of scale and product/price offering," he said.
Tesco is confident that growth will continue in 2009 and is reportedly planning to create 10,000 new jobs by December.
The supermarket has also announced a further £100m worth of price cuts and promotions on over 3,000 products in store. It says that money-saving offers on everyday products, including three for £10 on packs of meat, will continue into the New Year.
The supermarket is also launching a campaign to convince consumers that it "really is the cheapest supermarket". It is planning to publish the results of a price comparison survey - comparing the cost of real customer's baskets with the same baskets if bought at its competitors - "for all to see", which presumably means its website.
Tesco claims that its price comparison campaign will be more honest than those carried out by its competitors, which it says can be "misleading".
Commercial and marketing director Richard Brasher said: "This year, the cost of shopping will be more important to customers than it has ever been and I believe they deserve to know the truth about who offers them the best value for their hard-earned cash.
"For years retailers have made claims and counter-claims about who is the cheapest. But until now, nobody has looked at what shoppers actually put in their shopping baskets to provide a true picture of what customers are really spending.
"Our new real baskets look at the actual products people buy every day, including popular own-brand items and essentials such as own-brand milk, meat, fruit and vegetables, so customers can be confident that our price claims reflect real shopping."
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