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Tesco reports record Xmas & fresh food driver in strong Q3

Tesco has reported its latest trading results for 19 weeks ended 6 January 2018

Group like-for-like sales grew by 0.6% for the 19 weeks to 6 January 2018. Total sales (exc. fuel) grew by 0.8% at constant exchange rates and by 1.8% at actual exchange rates.

Like-for-like sales for the combined UK & ROI business over the 19-week period grew by 2.2%.

Whilst inflationary pressures remain in the UK market as a whole, the group continued to work with supplier partners to help mitigate the impact on customers. As a result, it has passed on less inflation to date than its competitors, recognised by Tesco customers in a continued improvement in its ‘Trust in Price’ score.

In the third quarter, like-for-like sales in the UK grew by 2.3%, representing the eighth consecutive quarter of growth and continued market outperformance. All formats and channels played their part, including Tesco's strongest quarterly performance in recent years in Extra hypermarkets (+1.8% LFL), continued good growth in Express convenience stores (+2.3% LFL) and over 5% growth in online grocery sales.

This strong momentum continued into the Christmas period, with record sales and volumes across the four weeks leading up to Christmas Day. Tesco delivered its biggest ever week of sales in the key Christmas week itself, significantly outperforming the market. Fresh food outperformance in this week was nearly 4%.

In addition to the improvements Tesco has continued to make to the competitiveness of its core proposition, customers responded positively to a strong seasonal offer, including our popular ‘Festive 5’ vegetable deal. All fresh categories significantly outperformed the market during the Christmas period, with a particularly strong volume performance in meat, fish and poultry.

All store formats continued to perform well over Christmas, with a similar level of growth in both large and small stores. The online grocery business had a record Christmas period, with over four million customer orders over the six weeks contributing to sales growth of 5.0%.

Tesco's own brand ranges also performed strongly, with sales in the exclusive fresh food brands, core Tesco range and Tesco finest* all growing by more than 4% in the period. The new Go Cook and Fox & Ivy ranges performed well, driving over 6% growth over the Christmas period in Tesco's own brand cook and homeware ranges, with over two million items sold since launch.

Incorporating Palmer & Harvey volumes and complexity during a record volume period was challenging, leading to lost tobacco sales across December and putting further strain into Tesco's distribution network, particularly post-Christmas.

Dave Lewis, Chief Executive, said, 'We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years. Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK.

'Incorporating Palmer & Harvey volumes and complexity during this peak period was challenging, resulting in lost tobacco sales across December and putting further strain into our distribution network, particularly post-Christmas. Whilst I am pleased to say these challenges have now been resolved, they took the shine off an otherwise outstanding performance for the period as a whole.

'Our colleagues and supplier partners have done a fantastic job serving our customers better every day throughout this exceptionally busy time, and I want to thank them for everything they have done.

'We are confident in the outlook for the full year and are firmly on track to deliver our medium-term ambitions.'