Supermarket bouncing back: Tesco begins recovery after toughest year
TESCO has started clawing its way back from the toughest year in its history – with growing sales for the first time since January 2014.
Efforts by new chief executive Dave Lewis to win back shoppers with improved customer service and product availability bore fruit as the supermarket increased sales by 0.3 per cent over the 12 weeks to February 1 compared with the previous year.
Data published by Kantar Worldpanel showed sales at Asda and Sainsbury's were down 1.7 per cent and one per cent respectively, while Morrisons' 0.4 per cent decline was its best performance since December 2013.
Tesco, whose accounting practices are being investigated after it overstated its annual pre–tax profit by £263million, saw its dominant market share eroded slightly from 29.2 per cent to 29 per cent, despite attracting an extra 236,000 shoppers into its stores over the past three months.
Fierce competition drove down grocery prices by 1.2 per cent over that period, saving British shoppers £327million.
Results were not a Christmas miracle caused by heavy advertising and unsustained price cuts. This looks more like a sustainable recovery
Fraser McKevitt, head of retail and consumer insight at Kantar, said: "Shoppers are taking advantage of both lower fuel prices and the continuing price war among the supermarkets to slightly increase their grocery spending.
"This has pushed the market into 1.1 per cent growth, low by historical standards but a considerable improvement compared to last November, when the market contracted.
"Tesco is bouncing back from a tough year, returning to growth for the first time since January 2014."
German chains Lidl and Aldi grew sales by 14.2 per cent and 21.2 per cent respectively to take their combined market share to 8.4 per cent – while Waitrose increased sales by 7.2 per cent for a 5.2 per cent share.
Bernstein analyst Bruno Monteyne said: "Tesco was clearly the biggest winner over this period.
"Dave Lewis's plan, although not yet fully revealed, is clearly showing improvement.
"Results were not a Christmas miracle caused by heavy advertising and unsustained price cuts. This looks more like a sustainable recovery."
Tesco shares gained 8½p to 241¾p while Morrisons added 6p to 184p. Sainsbury's fell 2½p to 265¼p.
