Financial roundup

Tesco, Hilton, M&S, Bakkavor and Finsbury trading positive

By Rod Addy

- Last updated on GMT

Food retailers and manufacturers are celebrating Christmas
Food retailers and manufacturers are celebrating Christmas

Related tags Finance Supply chain

Tesco, Hilton Food Group, Marks & Spencer, Finsbury Food Group and Bakkavor have all reported positive sales performance in their latest trading updates, indicating continued recovery from the pandemic.

The financial updates were issued the day after Sainsbury's, Nichols and Just Eat reported their performance​.

Tesco: Booker and online sales soar

Tesco reported like-for-like sales excluding petrol up 2.3% against the same time span in its third financial quarter and 2.7% comparing Christmas 2021 with 2020. Set against 2019 figures, third quarter sales rose by 8.2% and Christmas trading was up 9.2%.

Regionally, sales increases had been strongest in Central Europe, with UK revenue growth broadly flat, up just 0.2% over the period. The retailer's subsidiary Booker grew substantially in retail and foodservice, up 16.2% in the quarter and a staggering 20.5% over Christmas. Booker customers Premier, Budgens and Londis all performed well.

Online like-for-like sales growth proved explosive against 2019 figures, up 58.7%.

"Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range,"​ said Tesco chief executive Ken Murphy.

"This put us in a strong position to meet customers’ needs as, once again, COVID-19 led to a greater focus on celebrating at home. As a result, we outperformed the market, growing market share and strengthening our value position."

Clive Black, Shore Capital director and head of research commented: "With tailwinds in the fuel sector in the UK, profitable online grocery activity and what should be a tailwind in terms of food inflation, if managed effectively, the outlook for Tesco remains favourable in our view."

Hilton Food reports growth in slow cooked food

Hilton claimed year-on-year sales growth in the 52 weeks to 2 January 2022, driven by organic expansion. In Europe, sales versus last year were broadly flat against strong comparatives, but over a two-year period the company said it had achieved 'strong growth'. UK revenue increase had been particularly fuelled by consumer appetite for slow cooked food.

Panmure Gordon equity research analyst Matthew Webb said: "The stable performance of UK retail is a positive result given the shift of consumption back to the foodservice channel. This suggests a combination of a lasting increase in at-home consumption due to more working from home and some category share gains."

The company had made substantial progress in sustainable packaging, exceeding its target, with 70% average recycled content in packaging achieved.

Hilton also announced the acquisition of a 50% stake in automation and software services provider Agito Group Pty, which has supported its implementation of automated facilities in Australia and New Zealand. Hilton said it aimed to support the global expansion of the tech firm as it increased automation across its international business.

Marks and Spencer trading boom

In the 13 weeks to 1 January, Marks and Spencer reported food sales up a whopping 10% on last year or 12.4% compared to the same period in 2019. Total third quarter UK sales grew 18.6% to just shy of £3bn, with international sales taking the group over the £3bn threshold.

Retail parks and Simply Food stores continued to outperform. Larger basket sizes recorded in the first half of the period continued through the Christmas period as customers used M&S for more of their everyday shopping.

"As a result, M&S was the fastest growing major store-based food retailer in the period,"​ the company claimed. "The business generated its highest ever Christmas sales with December growth in line with the performance for the quarter. In addition, although not included in these numbers, M&S products performed strongly on, representing c.30% of baskets in December."

Its joint venture with Ocado had delivered positive online sales, with the retailer opening its second warehouse last year in response to demand.

Julie Palmer, partner at Begbies Traynor, said: “In a stay-at-home festive season, Marks & Spencer looks to have been a winner as consumers started spending the cash piles they have built up.

“What is clear is that the long-awaited turnaround of one of the country’s most famous names seems to be finally gaining traction.”

M&S chief executive Steve Rowe said: "Trading over the Christmas period has been strong, demonstrating the continued improvements we've made to product and value. Food has maintained its momentum, outperforming the market over both 12 and 24 months. The market continues to be impacted by the headwinds and tailwinds that we reported in the first half, but I remain encouraged that our transformation plan is now driving improved performance ."

Finsbury Food hails foodservice surge

Cake, bread and morning goods supplier Finsbury reported total sales of £166.5m for the six months to 25 December - an 8.9% increase versus the corresponding period in the prior year. The performance also represented a 4.4% increase on the first half of its 2020 financial year (30 June to 28 December 2019), which was a period unaffected by the pandemic.

The bulk of that growth had come from the group's overseas division (up 32.3%), and continued 'robust recovery' in foodservice sales (up 25.9%). By contrast, retail sales rose by just 1.5%.

Panmure Gordon's Webb said: "The stable performance of UK retail is a positive result given the shift of consumption back to the foodservice channel. This suggests a combination of a lasting increase in at-home consumption due to more working from home and some category share gains."

Throughout the first half of the current financial year, the group had faced 'persistent pressure from input cost inflation, staff shortages and other supply chain disruptions'. "It has been able to successfully mitigate the impact of these pressures to date through commercial negotiations, operational improvements and other supply chain initiatives,"​ it stated. It would continue to do so in the second half of the year.

Bakkavor salad sales hit, but everything else shines

Reporting on trading for the 52 weeks to 25 December, Bakkavor claimed revenue had increased by 6.2% compared to 2020 and by 1.2% compared to 2019. Overall, UK like-for-like sales grew by 2.9% compared to 2020 and were down just 2.3% compared to 2019.

Salad sales had been hit by labour availability over the summer and lockdown restrictions, but sales in all other categories had increased.

"We have seen strong sales momentum in the UK as lockdown restrictions eased and frequency of shopping visits returned,"​ the business stated. Product innovation had helped.

The company said it had offset cost inflation and labour shortages and implemented efficiency improvements. "Whilst the industry-wide challenges intensified in the last quarter of 2021 and are remaining into 2022, we continue to work closely with customers and suppliers to mitigate the ongoing impact."

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