Updated: Apr 10, 2019
SUPR view:
* Strong Christmas trading period and the twelfth consecutive quarter of growth.
* Christmas like for like sales up 2.6%, outperforming the UK market across food, clothing and general merchandise.
* Booker acquisition continues to be a strategic success with quarterly LfL sales up 11%.
* It is worthy of note that Tesco actual sales were +15% over the 19 week period as a result of Booker. The growth via acquisition strategy clearly working. It also gives a better comparison to Aldi’s reported +10% growth (Aldi do not disclose LfL’s and we believe their growth is predominantly coming from new store openings).
* Online continues to be a driver of out-performance with Tesco’s online LfL sales increasing by 2.6% over Christmas period. Nearly 51 million items were delivered in a single week – the highest ever recorded.
* The number of subscribers to Tesco Delivery Saver increased 3.8% year on year. The growth in users of the home delivery service plan highlights the continued importance of the online grocery market to retailers.
* Tesco continues to increase its competitiveness by delivering on its restructuring and cost reduction strategy across the group. Based on this performance we expect the Fitch credit rating agency upgrade to investment grade in October to be followed in due course by S&P and Moody’s as the performance continues to improve and the balance sheet de-levers through free cash flow generation.
