Tesco Sales Improved: Rise in Sales Attributed with Christmas 2015
UK grocer Tesco surprised the markets when they reported growth on their sales. It's the first time the company have seen increased sales in four years. Previously, Tesco has reported a significant fall for earlier periods last year, including the worst-ever report sales in 2015.
The rise came in the six-week Christmas period when their UK sales rose 1.3 percent. The six weeks ended on January 9 this year. Including their performance overseas, the total sales rose by 2.1 percent. Last year's Christmas is also better than 2014 by 2.1 percent. The positive growth in that period also led to the increasing of shares to more than 7 percent.
The news came as a surprise partly because Tesco's third quarter sales fell by 1.5 percent in the UK, according to Telegraph. Analysts have also expected a 2 percent drop in the company's sales in that period.
The surprising growth also came after Tesco's worst report in its history on April last year. They suffered a pre-tax loss of 6.4 billion pounds for the year.
As reported by the BBC, Tesco Chief Executive Dave Lewis stated that the rise of sales in the festive period was made possible by lower prices and more staff in stores. The grocer made price cuts and hire 4,000 additional staff in stores.
He said, "Our Christmas performance was strong. There is plenty more to do, but we are making progress and are trading in line with profit expectations for the full year." Lewis also mentioned an outstanding range of products and improvement of customer service as crucial to the growth.
The improvement also occurred in Tesco's subdivision in Europe and Asia. According to Lewis, their Thailand's market share peaked to its highest ever.
Tesco is not the only UK grocer facing growth this year. Bloomberg reported that rivals J Sainsbury Plc and Wm Morrison Supermarkets Plc also exceed analyst estimations. However, Tesco's growth in that period was better than its two main competitors.
Morrison reported a rose by 0.2 percent in a nine-week period to 3 January, after analysts estimated that their sales would fall by between 2 percent and 3 percent. and their shares spiked after that period. Meanwhile, Sainsbury reported a 0.4 percent fall, after analysts expected that the fall would be more than 0.7 percent.
The rise in Tesco's Christmas sales has created optimism both within the company and on the markets. Analysts also expected this momentum to be a good opportunity to match German rival grocers Aldi and Lidl.