Tesco "disappointed" after weak Christmas
12 January 2012 10:30
The UK's largest supermarket group, Tesco, has revealed a worse-than-expected drop in sales in the run-up to Christmas as it admitted its Big Price Drop low price campaign had failed to pull in the anticipated number of customers. The grocer triggered a price war with its £500 million price-cutting campaign at the end of September, however, in a statement, the company admitted: "We delivered a very good Christmas shopping experience for our customers but in a highly promotional market, the volume response to our increased investment into lowering prices did not offset the deflation it has driven."
Tesco, which has 2,700 stores in the UK, said the 2.3% decline in like-for-like sales excluding VAT and petrol in the six weeks to January 7th was below its own expectations and "disappointing".
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."
Yesterday, rival Sainsbury's reported a 2.1% increase in like-for-like sales excluding fuel but including VAT in the 14 weeks to January 7th, with analysts estimating sales would have been flat if VAT was taken out of the figures.
Tesco added that its plan for 2012/12 now reflects "substantially increased investment to deliver an even better shopping trip for customers - particularly in the UK." As a result, the company said that there was likely to be minimal group trading profit for the UK.
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