And the winner is…
Despite a relatively joyless holiday season for retailers in Britain, the leaders of two of the biggest supermarket chains are claiming Christmas victories. Philip Clarke, Tesco’s chief executive, said today that a 1.8% increase (excluding fuel) in Christmas sales from the same six-week period last year, made his business the clear winner. (The sales are from stores open a year or more.)
The proclamation counters claims yesterday by Sainsbury’s chief executive, Justin King, who said his supermarket won the Christmas season—calling his chain the “clear winner.” Sales from stores open a year or more grew 0.9%, excluding fuel, from a year earlier. Sainsbury’s finance director John Rogers said: “We see ourselves as being the Christmas winners.”
Declaring victory in this national retail rivalry is a bit of showmanship by company leaders, but also an attempt to reassure shareholders that theirs is the stock to buy. Christmas in particular is a telling time. Sales levels are higher and getting stock levels right is a tricky, and potentially costly, challenge. Analysts and investors watch the season closely, hoping to get some glimmer of what the holiday sales say about consumer spending in the coming year. Figures released so far from UK retailers suggest nothing spectacular, but no shocks either.
So who’s the victor between Tesco and Sainsbury’s? It depends on which numbers you look at. King of Sainsbury’s says that he’s talking about market share. A report this week from Kantar, a retail research firm, said that Sainsbury’s was the only retailer of Britain’s so-called Big Four (these include Tesco, Sainsbury’s, Asda, which is owned by Wal-Mart, and Morrisons) to increase its market share this holiday period compared to last year.
Comparing which company had faster sales growth during the holidays is problematic, as Tesco’s numbers are from a six-week period around Christmas, while Sainsbury’s is reporting full third-quarter numbers. Kantar helpfully compiled data for the 12 weeks through to Dec. 23 (though not including two crucial days, Christmas Eve and Day) showing 3.4% sales growth from Sainsbury’s compared to Tesco’s 2.9% growth. These sales figures are based on the purchases of 30,000 consumers from around the UK, who scan their buys at home with special equipment to report them to Kantar. (For further comparison, Asda’s sales grew by 2.2%, while Morrisons’ sales declined 0.6%).
If looking at Tesco’s quarterly numbers above, some analysts have pointed out that they appear better because of lousy numbers from the same period in 2011—a performance that earned the company its first profit warning in 20 years and set into motion a turnaround strategy. That said, Kantar’s Edward Garner says the six-week figures “really look as though Tesco has turned a corner.”
Both companies’ sales were driven by surging online demand. Tesco marked its biggest week ever for internet sales during Christmas, and sales (from stores open a year or more) were the strongest in three years. Meanwhile, Sainsbury’s got an additional bump from its Sainsbury Local convenience stores. Unlike larger supermarkets, these shops stayed open all day on Sunday Dec. 23, the busiest grocery shopping day of the year. Sainsbury’s said the week before Christmas was its “strongest trading week ever” with more than 27 million customer transactions and a record-breaking £16 million ($21 million) worth of sales during one hour between 12pm and 1pm two days before Christmas.
Despite what company leaders had to say—or because of it—the market in early morning London trading appeared to name Tesco the winner. Shares in Tesco rose 2%, while Sainsbury’s dropped by more than 1%.
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