Tesco outperforms the market over crucial Christmas period

Despite mounting competition, the supermarket giant is still cemented as one of the leading figures in the industry

Article updated: 9 January 2020 11:00am Author: Joe Healey

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  • 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.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

 

Joe Healey

Investment Research Analyst

Following his completion of the graduate scheme, Joe is an Investment Research Analyst covering equities. He holds a BA Hons Business Management degree and is currently studying towards CFA Level II after passing CFA Level I in June 2019.

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