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Tesco and Morrisons see sales slide Tesco and Morrisons see sales slide
(35 minutes later)
Tesco has reported a 2.4% fall in like-for-like UK sales in the six weeks to 4 January due to a "weaker grocery market". Like-for-like sales at Morrisons have fallen 5.6%, in the six weeks to 5 January, sending shares tumbling by 7%.
It also said international sales were down 0.7%, citing political instability in Thailand as partly behind the fall. It said a lack of online presence and competition by cut-price shops, such as Lidl and Aldi, were behind the fall.
At the same time, rival Morrisons reported a 5.6% drop in like-for-like sales, which exclude new stores. Tesco's like-for-like sales also fell, down by 2.4% during the Christmas period, and its shares fell by 4%.
Tesco chief executive Philip Clarke said its move to open fewer stores in the UK was also behind the sales drop. The supermarket giant said the fall was partly due to a "weaker grocery market" in the UK.
Shares in Tesco fell 1.6% on the news, while shares in Morrisons dropped 7%. Morrisons said it had seen a "disappointing" performance because of difficult market conditions and the rival discounts. The like-for-like sales figures exclude new stores.
In a statement, the supermarket said: "The difficult market conditions were intensified for Morrisons by the accelerating importance of the online and convenience channels, where Morrisons is currently under-represented, and by targeted couponing which was particularly prevalent in the market this Christmas."
It predicted its full-year profit would be at the "bottom of the range of current market expectation".
Tesco also said overseas sales were down 0.7%, citing political instability in Thailand as partly behind the fall.
Philip Clarke, chief executive at Tesco, said its move to open fewer stores in the UK was also behind the sales drop.
He said focusing on opening smaller, express stores in the UK would help.He said focusing on opening smaller, express stores in the UK would help.
Mr Clarke added: "Our overseas performance has improved since the third quarter, driven by an improving trend in Europe. This is despite continuing external challenges, including the recent political disruption in Thailand."Mr Clarke added: "Our overseas performance has improved since the third quarter, driven by an improving trend in Europe. This is despite continuing external challenges, including the recent political disruption in Thailand."
Tesco said its website had done well over Christmas, with a 14% rise in the number of UK online sales.Tesco said its website had done well over Christmas, with a 14% rise in the number of UK online sales.
For its part, Morrisons said it had seen a "disappointing" performance because of difficult market conditions and discounts by rivals. Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said Tesco's competitors, the discount retailers had "loudly announced their arrival", while the supermarket's investment in its store revamp would continue to help profitability.
In a statement, the supermarket said: "The difficult market conditions were intensified for Morrisons by the accelerating importance of the online and convenience channels, where Morrisons is currently under-represented, and by targeted couponing which was particularly prevalent in the market this Christmas." But he praised the strong performance of Tesco's website and its effort to concentrate on smaller stores, which bought a "record" trading day.
It predicted its full-year profit would be at the "bottom of the range of current market expectation".