Tesco and M&S Report Robust Christmas Food Sales Amid Economic Challenges
In This Article
HIGHLIGHTS
- Tesco and Marks & Spencer (M&S) reported strong food sales over the Christmas period, despite economic challenges.
- M&S experienced a 5.6% increase in food sales but saw a 2.9% decline in clothing sales due to a cyber-attack and reduced footfall.
- Tesco achieved its highest market share in over a decade, with a 3.2% rise in UK sales, driven by its "Finest" range.
- M&S plans to accelerate its reshaping strategy to focus more on food amid uncertain consumer environments.
- Tesco aims to maintain competitive pricing to continue gaining market share against rivals like Asda.
Retail giants Tesco and Marks & Spencer (M&S) have reported strong food sales during the crucial Christmas trading period, despite facing a challenging economic backdrop. Both companies have highlighted their strategic efforts to capture market share and navigate the evolving retail landscape.
Strong Food Sales Amid Economic Pressures
Tesco, the UK's largest supermarket chain, announced a 3.2% increase in UK sales over the Christmas period, marking its highest market share in more than a decade. Chief Executive Ken Murphy expressed delight at the performance, particularly noting the success of the Tesco "Finest" range, which saw double-digit growth. The company is now expecting to report annual operating profits at the upper end of its forecasted £2.9bn-£3.1bn range.
Similarly, M&S reported a 5.6% rise in food sales, attributing the growth to strong sales of core grocery items and new product offerings. However, the retailer faced challenges in its clothing, home, and beauty sectors, with sales falling by 2.9%. The decline was linked to the lingering effects of a cyber-attack and reduced high street footfall.
Impact of Cyber-Attack and Strategic Shifts
M&S's Chief Executive Stuart Machin acknowledged the impact of last year's cyber-attack on the company's non-food business, which resulted in a significant drop in profits. The retailer is now focusing on accelerating its reshaping strategy, which involves closing and relocating stores to prioritize food sales. M&S currently operates around 230 full-line stores and nearly 800 food-only outlets.
Competitive Landscape and Future Outlook
The competitive landscape remains intense, with Tesco and Asda vying for market dominance. Tesco has committed to maintaining competitive pricing, with a new "everyday low prices" campaign covering 3,000 branded products. Meanwhile, Asda has pledged to offer lower prices on 2,300 everyday items compared to competitors' loyalty card prices.
Equity analyst Aarin Chiekrie from Hargreaves Lansdown noted that Tesco is well-positioned to weather macroeconomic headwinds due to its scale and strong supplier relationships. Despite a slight slowdown in sales growth over Christmas, Murphy remains optimistic about Tesco's ability to continue gaining market share.
WHAT THIS MIGHT MEAN
Looking ahead, both Tesco and M&S are poised to navigate the evolving retail landscape by focusing on core strengths and strategic adjustments. Tesco's emphasis on competitive pricing and market share growth could further solidify its position as a market leader. Meanwhile, M&S's reshaping strategy may help it recover from the cyber-attack's impact and capitalize on the growing demand for food products.
The broader retail sector faces ongoing challenges, including rising costs and fluctuating consumer confidence. As companies adapt to these conditions, their ability to innovate and respond to consumer needs will be crucial in maintaining competitiveness and achieving sustainable growth.
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Tesco and M&S Report Robust Christmas Food Sales Amid Economic Challenges
In This Article
Aya Nakamura| Published HIGHLIGHTS
- Tesco and Marks & Spencer (M&S) reported strong food sales over the Christmas period, despite economic challenges.
- M&S experienced a 5.6% increase in food sales but saw a 2.9% decline in clothing sales due to a cyber-attack and reduced footfall.
- Tesco achieved its highest market share in over a decade, with a 3.2% rise in UK sales, driven by its "Finest" range.
- M&S plans to accelerate its reshaping strategy to focus more on food amid uncertain consumer environments.
- Tesco aims to maintain competitive pricing to continue gaining market share against rivals like Asda.
Retail giants Tesco and Marks & Spencer (M&S) have reported strong food sales during the crucial Christmas trading period, despite facing a challenging economic backdrop. Both companies have highlighted their strategic efforts to capture market share and navigate the evolving retail landscape.
Strong Food Sales Amid Economic Pressures
Tesco, the UK's largest supermarket chain, announced a 3.2% increase in UK sales over the Christmas period, marking its highest market share in more than a decade. Chief Executive Ken Murphy expressed delight at the performance, particularly noting the success of the Tesco "Finest" range, which saw double-digit growth. The company is now expecting to report annual operating profits at the upper end of its forecasted £2.9bn-£3.1bn range.
Similarly, M&S reported a 5.6% rise in food sales, attributing the growth to strong sales of core grocery items and new product offerings. However, the retailer faced challenges in its clothing, home, and beauty sectors, with sales falling by 2.9%. The decline was linked to the lingering effects of a cyber-attack and reduced high street footfall.
Impact of Cyber-Attack and Strategic Shifts
M&S's Chief Executive Stuart Machin acknowledged the impact of last year's cyber-attack on the company's non-food business, which resulted in a significant drop in profits. The retailer is now focusing on accelerating its reshaping strategy, which involves closing and relocating stores to prioritize food sales. M&S currently operates around 230 full-line stores and nearly 800 food-only outlets.
Competitive Landscape and Future Outlook
The competitive landscape remains intense, with Tesco and Asda vying for market dominance. Tesco has committed to maintaining competitive pricing, with a new "everyday low prices" campaign covering 3,000 branded products. Meanwhile, Asda has pledged to offer lower prices on 2,300 everyday items compared to competitors' loyalty card prices.
Equity analyst Aarin Chiekrie from Hargreaves Lansdown noted that Tesco is well-positioned to weather macroeconomic headwinds due to its scale and strong supplier relationships. Despite a slight slowdown in sales growth over Christmas, Murphy remains optimistic about Tesco's ability to continue gaining market share.
WHAT THIS MIGHT MEAN
Looking ahead, both Tesco and M&S are poised to navigate the evolving retail landscape by focusing on core strengths and strategic adjustments. Tesco's emphasis on competitive pricing and market share growth could further solidify its position as a market leader. Meanwhile, M&S's reshaping strategy may help it recover from the cyber-attack's impact and capitalize on the growing demand for food products.
The broader retail sector faces ongoing challenges, including rising costs and fluctuating consumer confidence. As companies adapt to these conditions, their ability to innovate and respond to consumer needs will be crucial in maintaining competitiveness and achieving sustainable growth.
Related Articles
Tesco Meal Deal Price Hike Reflects Rising UK Food Costs
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