Tesco unveils record Christmas results

Date : 14 January 2021

Nick Gladding

Senior Retail Analyst

Tesco has reported a very strong set of results in the UK and Ireland, with trading momentum from Q3 accelerating into the Christmas trading period. However it also warned of increasing Covid costs as the pandemic becomes more severe. These are now expected to reach £810m for the full year, up £85m from the previous estimate in October.

Headline LFL results

 

Q3: 13 weeks to 28 Nov

Christmas: 6 weeks to 9 Jan

Combined: 19 weeks to 4 Jan

UK

+6.7

+8.1

+7.2

ROI

+11.8

+12.7

+12.1

Booker

+0.1

-8.3

-2.5

UK & ROI

+6.1

+6.3

+6.1

Central Europe

+0.9

-4.2

-1.0

Group

+5.7

+5.4

+5.6

 

UK Christmas highlights

  • LFL growth accelerated from 6.7% in Q3 to 8.1% at Christmas with growth across all channels, formats and categories
  • Online sales grew over 80% equating to almost £1bn of extra sales over the 19 week period
  • Order numbers continued to grow post Christmas, with records broken for both home delivery and click & collect last week. Delivery saver subscribers grew by 100,000 to 680,000
  • Large store sales increased as customers favoured larger, less frequent trips
  • Increased treating: Finest* sales grew by 14%
  • Price competitiveness: Tesco said it is at its most price competitive against the entire market in nearly a decade with perceptions of value greatly boosted by the launch of Aldi Price Match. Targeted promotions such as the Festive 5 vegetable offer, 3 for 2 party food and 25% off 6+ bottles of wine also worked well
  • Clubcard penetration has risen by 10 percentage points to over 80% of sales in large stores following the launch of Clubcard Prices in September
  • Meat free success: Sale of new Plant Chef range rose 90%
  • Sustainability: Tesco achieved its target of removing 1 billion pieces of plastic from products sold
  • General merchandise sales increased 4%: Toys, home and electricals grew strongly

Booker pivots towards retail to offset catering shutdown

  • Growth to retail customers picked up to 14% helping to offset lower catering sales which were 30% down in Q3 and 49% lower in the Christmas period
  • Total sales growth of 12.4% over the 19 weeks included a 14% contribution from Best Food Logistics, acquired last March

Large stores drive growth in Ireland

  • Large stores were the biggest contributor to Tesco’s 12.1% growth in Ireland
  • Online sales rose 70%, enabled by new capacity
  • Net promoter scores reached new heights in Q3 as scores on value, quality and service all improved

Tighter Covid restrictions impact in Central Europe

  • Sales grew marginally in Q3 as Tesco strengthened its value proposition and traded against a weak comparative when the business was resized and simplified
  • Sales fell in the Christmas period as restrictions on opening hours and on the sale of non-food were implemented, impacting trading in all markets

More insight for Retail Analysis subscribers

  • Christmas results tracker – See the shape of festive trading unfold in this daily updated report
  • Christmas review and new year outlook – Full analysis of Christmas trends and retailer performance will be released next week.
  • Strategic Outlook for Tesco – Find out more about Tesco’s priorities as it refocuses on driving growth in the UK in this recently updated report