Tesco has released its latest trading statement, covering the 13-week (Q3) period to 25 November 2023 and the Christmas period, covering the six weeks to 6 January 2024.
The figures refer to like-for-like sales, excluding VAT and fuel.
UK Performance Highlights
The UK continued to outperform the market, with consistent, stronger-than-expected volume growth and market share performance – up by 15bps, to 27.9%, in the four weeks to Christmas.
The six-week Christmas like-for-like sales increase of 6.8% includes growth of 9.2% in the four weeks before Christmas.
Online sales went up by 11.5% – with orders, volumes, pick rates and availability all up, year on year – and nearly half a million Whoosh same-day home delivery orders were completed in the lead-up to Christmas.
ROI Performance Highlights
In the Republic of Ireland, sales and volume growth drove the strongest market share in nine years.
Market share growth went up by 73bps, to 24.5%, switching gains for 12 consecutive periods, and the strongest share since 2015.
There was a particularly strong performance in fresh food, driven by consistently strong volumes.
Tesco’s value proposition was further strengthened by ‘Clubcard Prices’ deals on festive favourites, with Clubcard sales penetration going up by 10ppts, year on year, to 85%.
Twenty-one (21) Tesco stores benefitted from an extensive refresh, including new and improved fresh-produce and bakery areas, and innovations in Tesco’s coffee, hot-food and food-to-go propositions.
Central Europe
In Central Europe, there was an ‘encouraging response’ to investment in value against a continuingly challenging backdrop, improving performance across the period, with customers responding to further investment in value through Tesco’s Clubcard Prices – Clubcard sales penetration went up by 4ppts, year on year, to 89%, supported by targeted digital campaigns – and its Low-Price Guarantee on over 500 own-brand lines.
Tesco experienced volume growth in food over the six-week Christmas period, supported by a focus on quality within its fresh-food and seasonal ranges.
Outlook
Tesco’s continued investments across the full breadth of its customer offer have resulted in a stronger trading performance than it anticipated, so it is upgrading its guidance for the current financial year, with retail adjusted operating profit of approximately £2.75 billion – above its previous guidance range of £2.6 billion to £2.7 billion – resulting in a retail free cash flow generation of around £2.0 billion.
CEO Comment
Tesco chief executive Ken Murphy said, “The Tesco team has worked harder than ever to help customers celebrate this Christmas, with our strongest-ever range of great value, fantastic-quality food. I want to say a huge thank-you to all of our colleagues for their relentless dedication and energy. We stepped up our investment in service over the key festive period, with more colleagues on the shop floor, helping to deliver market-leading availability and making this our best Christmas yet.
“As part of our focus on value, we offered a full Christmas dinner for just £2.09 per person, helping to drive record sales in the weeks leading up to Christmas and further market share gains. We put a strong focus on quality and innovation, too, with over 550 new and improved festive products. Over 18 million customers took the opportunity to treat themselves by shopping from our Finest* range, which saw sales growth of nearly 17%.
“Over the period, we cut nearly 2,700 prices, with a further 150 prices cut just this week, cementing our position as the UK’s cheapest full-line grocer. Our powerful combination of great value, quality, availability and service means that we head into the new year in great shape, to keep delivering for customers.”
View the full Tesco report here: https://www.tescoplc.com/q3-and-christmas-trading-statement-202324/.
