The UK’s largest supermarket chain had its busiest days ever over Christmas, reporting “strong” growth thanks to sales of fresh food as customers sought to eat more healthily.
Tesco’s busiest ever days were 22 and 23 December, the group said.
Behind the recorded 3.7% UK sales growth in the 19 weeks to 3 January was a further shift towards low and no-alcohol drinks, people buying alternative Christmas meats like beef joints, AI-powered deliveries and a “standout” performance in fresh food.
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In a potential sign of the impact of weight-loss jabs, UK fresh food sales rose 6.6% compared with a year earlier and 250,000 bottles of alcohol-free prosecco were bought.
Chief executive Ken Murphy would not comment on whether injections like Wegovy and Ozempic will be “a material factor” to Tesco or not, saying he didn’t want to make predictions at this stage, “but we are seeing a continuation of trends of people wanting to eat more healthy generally”.
Such jabs, containing a class of medication called GLP-1s, can make users less inclined to drink alcohol, avoid eating processed foods and seek fresher foods like lean meats and fruit and vegetables.
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For now, the retailer is watching the trend “very closely” and not launching a dedicated line of items for people on the drugs, as Mr Murphy said, “we already have a wide range of products that I would describe as GLP-1 friendly”.
Also boosting the grocer’s overall sales was online sales growth of more than 11% as Tesco said it used artificial intelligence (AI) scheduling tools to offer more delivery slots and help optimise deliveries.
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In a market with “extraordinary” and “relentless” competition, in the words of Mr Murphy, Tesco said its price rises were below the industry average of 4.3%, as judged by consumer insight company Worldpanel by Numerator.
He declined to give the exact rate of price rises.
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In an upbeat update, Mr Murphy said he was “pleased” and that “customer spending and resilience was good over Christmas”.
Only sales data is released in the update, with guidance issued on profits, currently expected to be “the upper end” of between £2.9 and £3.1bn.
Lukewarm
Not all corporate Christmas updates were as positive about the economy and how consumers were feeling.
Britain’s biggest fast food chain, Greggs, said it had “good progress” but it was “a challenging year where subdued consumer confidence impacted the food-to-go market”.
Despite challenges, the sausage roll maker reported sales were up 2.9% when adjusted to account for the 121 new shop openings, and market share increased.
About 120 new Greggs will open this year, the company said.
High street department store Marks and Spencer reported it had still been impacted by the Easter cyberattack, in which online systems were out of action into the summer.
The attack had a “long tail impact on stock data and management”, M&S said on Thursday.
This impact, as well as reduced high street footfall, contributed to fashion, home and beauty sales dropping 2.9% in the 13 weeks to December when the same shops are compared.
But at the same time, a record number of customers shopped at M&S as food sales were strong.
Italian ready meals, the in-store bakery and deli helped up food sales as more shoppers bought food more regularly. Value ranges grew by 20% as M&S expanded its range.
Cold
In clear contrast to the record Christmas for supermarkets, according to data from Worldpanel by Numerator, Primark parent company Associated British Foods (ABF) said trading conditions were “tough” and expected to continue in the short term.
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The UK fared better than continental Europe, said George Weston, ABF’s CEO.
“Primark has had a challenging start to the financial year, with a mixed performance.”
The clothing market was said to be “difficult… particularly over Christmas”, though like-for-like sales rose 1.7%.
