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Published: Fri, January 12, 2018
Economy | By Melissa Porter

Tesco enjoys a record Christmas as food sales boost performance

Tesco enjoys a record Christmas as food sales boost performance

Britons, whose spending power has been squeezed by inflation, prioritised food this Christmas and cut back on almost everything else, industry data has shown. But there were signs that higher inflation was "abating a little". In retained owned and franchise markets, constant currency revenue was up 6.5%, the retailer said.

However, analysts had expected a rise of between 2.4 and 3.2 percent.

United Kingdom rivals Sainsbury's, Britain's second largest supermarket group, and fourth-ranked Morrisons, both beat forecasts for Christmas trading.

Britain's biggest retailer Tesco celebrated a record Christmas after reporting a steep rise in sales over the critical festive trading period.

The clothing market was particularly weak in October and food sales have been continuously underperforming, he said.

Mr Lewis said: "We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years".

Lewis's strategy to rebuild Tesco following an accounting scandal in 2014 has been based on increasing food sales.

The grocery chain was further buoyed in December when its £3.7 billion takeover of wholesale group Booker was given the final all-clear by the competition watchdog. The general merchandise category includes all non-food items but excludes clothing.

On Thursday, M&S said same store food sales fell 0.4%.

CMC Markets analyst, Michael Hewson commented "With concerns starting to rise about an [increase] in inflation due to the recent strength in oil prices it is understandable that bond markets might be nervous if a normally large buyer of USA treasuries either stops buying them or even starts to sell large amounts".

The company also said that like-for-likes sales over the Christmas period were 4 per cent higher than the same period a year earlier.

Tesco chief executive Dave Lewis said that the fallout from that had created challenges which had taken "the shine off an otherwise outstanding performance for the period as a whole".

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