Tesco’s seasonal sales rise of 3.1 per cent was compared unfavourably with Sainsbury’s 3.7 per cent lift and its valuation slid 3 per cent after Tuesday’s news.
Brokers said Tesco’s performance was no disaster, but investors are fleeing retail shares, expecting that trading will remain tough.
Shore Capital analyst Clive Black said Tesco’s international growth of 26.9 per cent was higher than expected and that total UK sales, excluding fuel, were up 8 per cent compared with Sainsbury’s 4.7 per cent. “I think it will prove to be oversold in the long term,” he said.
Tesco corporate and legal affairs director Lucy Neville-Rolfe said: “When you look at us [and Sainsbury’s] over the same period, we’re much of a muchness.”
Sainsbury’s strong performance wrong-footed some in the City, as it delivered its 12th consecutive quarter of like-for-like growth. Chief executive Justin King told Retail Week food sales growth was partly driven by demand for premium and value ranges. However, he added: “Customers’ budgets are tighter and they are thinking more carefully about what they spend on.”
Morrisons, which updates on Tuesday, is expected to be the Christmas grocery winner.