Jan 11, 2018

Tesco misses expectations as Christmas shoppers cut back on gifts

Tesco has missed analysts' expectations for Christmas trading in its core UK business as cautious British consumers spent less on expensive gifts over the festive season. While Tesco saw brisk trade in food over Christmas, with sales increasing 3.4 per cent on a same-store basis, weak sales of gifts, computers and home entertainment products dragged growth lower than expected. Over the quarter to January 6, Tesco's UK sales rose 2.3 per cent while overall group revenues rose 0.9 per cent, dragged down by Tesco ceasing unprofitable bulk sales in Thailand. "I am not pessimistic on Tesco," said analyst Clive Black of Shore Capital, despite the retailer having underperformed the consensus of analysts' expectations for Christmas sales in the UK. He said that while general merchandising had been a "Perennial problem" for Tesco, "It has not been at the forefront of their operating strategy, which is all about grocery". Mr Lewis said that customers choosing to spend their money on luxury food was one of the strongest shopping trends Tesco had observed in the UK this Christmas, as they sacrificed spending on gifts.

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