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Tesco returns to sales growth for first time since January 2014 Tesco returns to sales growth for first time since January 2014
(about 4 hours later)
Tesco has returned to growth for the first time in a year, as sales increased 0.3 per cent year-on-year, according to new figures. Tesco grew sales in January for the first time in a year, according to the latest supermarket data.
Britain’s biggest retailer is attempting to move on from a series of profit warnings and an accounting scandal and recently launched a turnaround plan masterminded by new chief executive Dave Lewis. The injection of sales pace will come as a relief for under pressure Tesco chief Dave Lewis, who is steering the retailer under the weight of investigations by the Serious Fraud Office, Financial Reporting Council and the Groceries Code Adjudicator over the £263 million accounting scandal and alleged supplier abuse.
However, it still faces investigations into the accounting error, including the first ever probe by the Groceries Code Adjudicator. Tesco shares rapidly rose 2 per cent to 238.2p as Kantar Worldpanel revealed sales increased 0.3 per cent in the 12 weeks to 1 February, while Asda overtook Sainsbury’s to regain its place as the country’s second-biggest grocer.
Like its rivals, it received a boost as shoppers took advantage of both lower fuel prices and an ongoing price war among the supermarkets to slightly increase their grocery spending, according to Kantar Worldpanel. It comes as Aldi and Lidl’s attack on the Big Four supermarkets started to slow although the German discounters continued taking customers away from Asda and Sainsbury’s.
An additional 236,000 shoppers visited Tesco stores in the last 12 weeks and sales edged up 0.3 per cent, Kantar grocery share data showed. Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: "Britain’s biggest retailer is bouncing back from a tough year, with Dave Lewis’s efforts to overhaul the supermarket attracting an additional 236,000 shoppers into its stores in the last 12 weeks.
However, its overall market share fell to 29 per cent, down by 0.2 percentage points compared to last year, Kantar said. "Despite the increase in sales, Tesco’s overall market share fell to 29 per cent down by 0.2 percentage points compared to last year."
Asda overtook Sainsbury’s to win back the title of second largest retailer with 16.9 per cent of the market, but both grocers saw sales fall year-on-year. Asda sales slipped by 1.7 per cent and Sainsbury’s by 1.0 per cent. Clive Black, retail analyst for Shore Capital, suggested: "The Kantar data is good news for British grocers in that it records expansion after a sustained period of decline.
Morrisons, which is looking for a new chief executive after Dalton Philips stepped down last month, saw sales drop 0.4% – its best performance since December 2013. "Within that it is very notable that Tesco UK has recorded growth, noting favourable comparatives, and this should put a spring in the step of Dave Lewis for sure. The cut in branded prices in January seems to have gone down well with shoppers."
The Bradford-based retailer rose to the top of the FTSE in early trading. However, some analysts said Tesco’s data was flattered by the unprecedented Black Friday sales, which saw shoppers fighting over discounted televisions and appliances.
The figures showed that growth at discounters Aldi and Lidl, which have been the cause of much of the Big Four’s misery over the last few years, had slowed from peak levels last year. Investors were also heartened by Morrisons’ recovery.
Aldi’s growth slowed to 21.2 per cent from a peak of 36 per cent in April 2014, while Lidl’s growth was 14.2 per cent versus 24 per cent in May last year. Shares rose 5.8 per cent go 188.3p after the industry data revealed a shallower decline in sales, down 0.4 per cent, at the grocer, which is currently on the hunt for a new chief executive.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: "Early results suggest that discounters Aldi and Lidl will find their accelerated growth levels hard to match in 2015. Aldi and Lidl grew 21.2 per cent and 14.2 per cent. But this is much slower than previous years. At the same point last year, Aldi was growing by 32 per cent and Lidl 17.2 per cent.
"Despite this slowdown, both retailers are still taking share from the other retailers – rising 0.8 percentage points and 0.4 percentage points respectively to 4.9 per cent and 3.5 per cent."  Black said: "We have talked about the free lunch coming to an end for Aldi and Lidl and whilst still gaining share and so outperforming, the slowdown in momentum is also noteworthy."
Kantar said premium store Waitrose benefited from a greater focus on price and promotion and saw sales rise 7.2 per cent, taking its overall share to 5.2 per cent. Elsewhere in the data, Waitrose also performed strongly, growing sales by 7.2 per cent, staving off attempts by Aldi to overtake it as the UK’s sixth biggest retailer.
Kantar also said the impact of Aldi and Lidl undercutting the market with cheap prices meant grocery inflation was also down for its 17th successive period, off 1.2 per cent for the 12 weeks to 1 February the average price of milk and bread fell.