gpolit.com
gpolit.com April 25, 2018


Morning Round-Up: Tesco and Marks and Spencer hold back the FTSE

12 January 2018, 12:22 | Kenneth Drake

Marks and Spencer shares dive as Christmas sales drop while John Lewis and Tesco rise

Tesco and M&S weather the perils of Christmas

Alongside the Christmas update, Tesco reported a 2.3% rise in sales for the third quarter, just before the festive period, meaning that for the combined 19 weeks it was up by 2.1%.

M&S said like-for-like revenues fell 1.4 per cent in the 13 weeks to December 30 while Tesco's United Kingdom sales rose 2.3 per cent in the 19 weeks to January 6.

"Rowe's five-year plan is no more than a profit stabilisation strategy and (we) see better value elsewhere", Investec's Kate Calvert, who has a "sell" rating on M&S, said.

Non-tobacco sales at Booker Food Group, subject of a £3.7bn Tesco takeover, rose by 5.9% in the third quarter.

That trend was confirmed today by John Lewis (JLH) Partnership chairman Sir Charlie Mayfield, who said pressure on margins at John Lewis and Waitrose had intensified in recent months "because of our choice to maintain competitive prices".

This means for the overall 19 week period ending January 6, Tesco's United Kingdom like-for-like sales enjoyed a 2.1 per cent uptick, while its overall sales in the country rose by 2.3 per cent.

Catherine Shuttleworth, chief executive at retail marketing agency Savvy, said: "We think that the M&S food shopper has in part been lured away to the discounters this Christmas with their enhanced premium ranges and outstanding wines and spirits offers".

The supermarket giant said United Kingdom like-for-like sales rose 1.9 per cent in the 19 weeks to January 6, driven by a strong grocery performance.

Alex Williamson, chief executive of House of Fraser, said: "We are a business in transition; our focus is on driving profitability rather than chasing revenue at any cost".

Group like-for-like sales grew by 0.9% in Q3 and were up by 0.1% in the Christmas period.

Retail's "Super Thursday" failed to identify an outright victor from the festive trading season as heavyweights Tesco (TSCO) and Marks & Spencer (MKS) were both given the cold shoulder by investors.

The company said it remained confident in its outlook for the full year and was firmly on track to deliver its medium-term ambitions.

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