Despite mounting competition, the supermarket giant is still cemented as one of the leading figures in the industry
Tesco outperforms the market over crucial Christmas period
- Grocer delivers fifth consecutive Christmas period of growth, which is impressive considering it was the best performer in 2018.
- Like for like sales grew by 0.4% in the UK, strong performance in its fresh food segment and a positive response to the expanded plant-based food range sees group outperform the market.
- Acquisition of wholesaler Booker in 2018 proves to be a great diversifier to Tesco’s offering, generating strong growth in a difficult environment.
- Robust initiatives such as the Clubcard and seasonal offerings continuing to drive both consumer loyalty and demand in their key UK market.
- Recommendation: With the group being impacted by a competitive market dynamic we continue to recommend these shares as a ‘Hold.’
Considering the difficulty supermarkets are currently facing, as indicated by M&S’ figures this morning, these results go to show Tesco is still one of the leading figures in the industry. The Booker acquisition is generating strong growth in a difficult environment and is an area the group is actively looking to improve moving forward, which should be promising news for investors.
Overall these results indicate a strong finish to a difficult year and will set up investors nicely heading into 2020. No news regarding the businesses potential disposal of Thai and Malaysia operations, so anticipation will roll-over to the next update. Despite a defensive element to the shares, we currently view the stock as a ‘Hold’ considering the competitive market dynamic, particularly the discount retailers who continue to be a prominent threat.
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