Shares in the supermarket were up over 5% during mid afternoon on Thursday after it revealed the Christmas period had provided it with a bigger boost than expected.
Group like-for-like sales growth of 2.1% and UK like-for-like sales growth of 1.3% were recorded.
This follows similarly strong performance during the final months of 2015 from peers including Sainsbury’s and Morrisons.
“Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products,” said chief executive Dave Lewis. “Our customer service improved materially and our colleagues went the extra mile. Put simply, we put customers at the heart of everything we did and they responded by buying more of what they needed at Tesco.”
According to Mark Boucher, manager of the Smith & Williamson Enterprise Fund the relatively buoyant UK consumer is set to help prop up the likes of Tesco to some extent for some time to come yet.
“The UK consumer has more discretionary income to spend as energy and fuel prices are lower and incomes are rising,” he said. “Christmas trading has been good and the supermarkets have had new managements come in and make changes”.
Boucher had a note of warning however. “I think it is still too early to buy into supermarket shares as there are still problems to be dealt with,” he said. “They are going find it remains difficult to compete with the discount chains and the major UK supermarkets are still not sized correctly, with both the scale of individual stores and the number of them they have being too large. The big four are likely to lose more market share yet, and it is how well they manage this that is the key.”
