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Little Christmas Cheer For Britain's Supermarkets

Published on Jan 6 2020 2:31 PM

Little Christmas Cheer For Britain's Supermarkets

Britain's major supermarkets are forecast to report lacklustre Christmas sales this week, reflecting weak economic growth and comparisons with generally solid festive results in 2018.

Industry hopes had risen heading into retailers' peak selling season, boosted by a decisive national election on Dec. 12 that saw Prime Minister Boris Johnson's Conservatives secure a commanding parliamentary majority.

Following a year of political instability and uncertainty over Brexit, that fueled speculation of a release of pent-up demand from the nation's shoppers.

But analysts say monthly data from market researcher Kantar and weekly figures from the upmarket Waitrose chain, owned by the John Lewis Partnership, indicate falling sales for Britain's major grocers over the last quarter of 2019.

Morrisons, Britain's No. 4 supermarket group which gives an update on Tuesday, is expected to be the biggest loser. Analysts forecast group like-for-like sales fell 2.2% in the 22 weeks to Jan. 5 - a period that spans Morrisons third quarter to 3 November and the following nine weeks covering Christmas.

The forecast compares with a 1.9% fall in its second quarter, which was its first decline since 2016.

Sainsbury's, the No. 2 player which is trying to rebuild investor confidence following a botched attempt to take over Walmart owned rival Asda, reports on its third quarter to 4 January on Wednesday. Analysts are forecasting flat grocery sales after a 0.6% rise in the second quarter.

Market leader Tesco, which launched a fresh wave of price cuts on Monday, updates on Thursday, reporting on its third quarter to 23 November and the six weeks to 4 January.

Like-For-Like Sales Fall

Analysts at Barclays forecast like-for-like sales down 0.5% for the quarter and down 0.2% for the Christmas period. In Tesco's second quarter, UK like-for-like sales fell 1%, ending a run of 14 quarters of growth.

Investors will also be looking out for news of CEO designate Ken Murphy's start date and any update on the possible sale of Tesco's Asian business.

Monthly data from Kantar on Tuesday will give an early indication of how Tesco and Sainsbury's traded.

On Monday Aldi UK, the British arm of the German discounter, reported a 7.9% increase in total sales in the four weeks to 24 December and said like-for-like sales were positive.

Aldi, along with fellow German-owned discounter Lidl, has been winning market share from Britain's biggest grocers with an aggressive store opening programme.

British clothing, food and homewares retailer Marks & Spencer, which is in the midst of its latest attempt at a turnaround, is also reporting on Thursday. Analysts on average forecast third quarter UK food like-for-like sales up 1.1%, with clothing and home sales on the same basis down 0.8%.

News by Reuters, edited by Donna Ahern, Checkout. Click subscribe to sign up for the Checkout print edition.

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