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During the Christmas season, major retailers Tesco and Marks & Spencer (M&S) reported an increase in food sales, although other companies experienced more difficulties during this important trading period. Tesco announced a 3.2% rise in UK sales compared to the previous year, achieving its highest market share in over ten years. Meanwhile, M&S highlighted a record number of customers and solid food sales, despite declines in clothing, home, and beauty product sales.
The festive period holds significant weight for retailers, often accounting for a large portion of their yearly revenue and profits. M&S revealed that its food sales grew by 5.6% in the three months ending 27 December. CEO Stuart Machin attributed this success to popular Christmas items as well as stronger demand for Italian ready meals, the in-store bakery, and deli offerings. Machin emphasized that “Food sales were strong and the business continues to outperform, hitting a new market share milestone in the period.” However, he acknowledged that consumer confidence remained “fragile” and pointed out a 2.9% drop in sales for clothing, home, and beauty, partly due to reduced foot traffic on High Streets and ongoing impacts from a cyber-attack the previous year that disrupted stock management.
Tesco’s CEO Ken Murphy expressed satisfaction with the supermarket’s Christmas performance amid stiff competition, reporting a 5.2% increase in food sales, boosted by strong demand for fresh produce and party food. The Tesco Finest range enjoyed particularly impressive growth, with sales rising 13%. Murphy noted consumer spending habits were mixed, observing that “you are seeing consumers whose household budgets are in pretty good shape, and then you’re seeing a lot of people that are really counting every penny.” The supermarket now expects to report annual operating profits near the top end of the £2.9 billion to £3.1 billion range forecast last October.
Retail analysts noted Tesco’s ongoing strength, driven largely by pricing strategies. Sofie Willmott from GlobalData Retail commented, “Tesco has seen a consistently strong performance over the last couple of years really, where it’s really focused on price.” She explained Tesco’s success was partly due to price matching with Aldi and offering better prices to Clubcard holders, helping maintain its leading market position despite intense discounting by competitors. However, some investors were hoping for a larger profit upgrade. Analyst Aarin Chiekrie from Hargreaves Lansdown attributed weaker-than-expected performance to Tesco’s Booker wholesale business, which faced declining tobacco sales, a situation that contributed to a nearly 6% drop in Tesco’s share price.
In contrast, shares of AB Foods, which owns Primark, fell sharply by 11% following a cautious sales report. Although UK sales at Primark increased by 1.7% during a challenging market period from October to January, sales in Europe fell by 5.7%. The parent company, which also operates food brands like Twinings, Ovaltine, and Ryvita, warned that earnings would miss previous forecasts, driving down share prices. Meanwhile, Greggs, the bakery chain, reported a 2.9% rise in same-store sales but issued a warning about subdued consumer confidence and forecasted that profits for the year would remain close to 2025 levels, leading to a 9% drop in its shares
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