Following sluggish results by Marks & Spencer and Morrisons, reported by foodmanufacture.co.uk yesterday (January 11), experts have described the latest results from Tesco as disappointing.
Clive Black, analyst at Shore Capital, said: “Tesco’s trading update for the six weeks to January 7, has confirmed what secondary market share data has suggested. That is disappointing trading in the key UK retail division, indeed it is somewhat worse than expected.”
The UK’s biggest retailer saw like-for-like sales fall by 2.3%, against a third quarterly rise of 0.9%, for the period ending January 7.
Total sales in the UK rose moderately by 3.8%, which Black described as “materially below” Shore Capital's anticipated range for UK trading over the festive season.
Black added: “We have had our resolve tested on Shore Capital’s positive stance towards Tesco stock in recent periods and we have to capitulate.
“In light of the work that must be undertaken and the need to see its output, we are downgrading our recommendation from “buy” to “hold”.
Tesco said it was “disappointed” with its UK performance and confirmed that the firm had “much more to do” to satisfy consumers.
Chief executive, Philip Clarke added: “In a challenging economic environment, we made good progress internationally but despite record sales, we are disappointed with our seasonal trading performance in the UK.”
Despite a strong performance from Sainsbury and Asda, further prove of a slowdown in trade for retailers surfaced today after chocolate maker Thornton’s said tough competition had hit sales over the festive season.
Like-for-Like sales at Thorntons fell by 4.2% for the period ending January 7, with own-store sales declining by 6.8% to £44.9 million.
Chief executive, Jonathan Hart said: “Consumers have remained very cost conscious over the period and have been purchasing selectively. There has also been a high level of promotional activity across the market.
“This has been evident across all our sales channels and has negatively impacted our gross margins and consequently profitability in the first half of the year as we stated in our December trading update.”
Further bad news for the firm was announced yesterday after it was revealed that it had been fined £20,000 after a worker had her finger broken after it became entangled in machinery at its plant in Derbyshire.