Christmas shoppers' splurge on champagne boosts Tesco sales
Shoppers at Tesco propelled the retailer to its best Christmas sales performance in three years as they loaded up on champagne and the chain's 'Finest' range in the run-up to the festive season.
Strong results from the retailer -- the world's fourth biggest -- were welcomed by analysts as Tesco posted a 6.9pc rise in group sales in the six weeks to January 9, and sales in the UK, excluding petrol, jumped 8pc. The figures beat analyst estimates.
In a trading statement, Tesco said that in Europe, which includes its Irish arm, sales in the period were up 0.8pc, excluding petrol, at constant exchange rates but fell 2.2pc at actual rates.
Tesco doled out double points on its clubcard loyalty scheme before Christmas and in the six-week trading period its customers redeemed £34m (e37.9m) more clubcard vouchers than in the same timeframe last year. The retailer said it sold 35pc more champagne in the period compared to the previous Christmas season.
Tesco's finance director Laurie McIlwee said that the retailer's expensive 'Finest' range had been included in a quarter of all its customers' trolleys and baskets during the reporting period.
Analysts at Nomura said that 2010 will be "Tesco's year" and added that the 4.2pc like-for-like UK sales growth, which excludes the impact of clubcard usage, was "significantly stronger" than the 3pc consensus analyst estimate.
"This should lay to rest the concerns aired in the market," said Nomura analysts.
The 4.2pc growth was actually shifted down to 4.1pc after the impact of a 0.1pc accounting change.
Some analysts had questioned the impact of clubcard points, saying the number of points awarded before Christmas could have artificially boosted demand at the retailer. Barclays Capital had expected that the clubcard points could have added as much as 1.5pc growth to like-for-like sales.
Deutsche Bank analyst James Collins yesterday said that Tesco was "back in the industry pack" and that its trading update should serve to remind investors of the "structural strength" of the UK food retail sector.
Tesco shares closed up under 1pc at £4.21.