TIDMTSCO
RNS Number : 2165Z
Tesco PLC
09 January 2020
3Q and Christmas Trading Statement 19/20
STRONG PERFORMANCE in a subdued uk MARKET
19 weeks 3Q + Christmas Trading = 19 week period
Sales Total LFL sales Total LFL sales Total LFL sales
GBPm sales change sales change sales change
change change change
(constant (constant (constant
rates) rates) rates)
---------------- --------- ---------- ---------- ----------
UK & ROI 16,807 0.2% 0.4% 0.2% 0.4% 0.2% 0.4%
--------- ---------- --------- ---------- --------- ---------- ---------
UK 13,709 (0.5)% (0.4)% 0.0% 0.1% (0.3)% (0.2)%
ROI 873 0.7% 2.0% 0.6% 1.9% 0.7% 2.0%
Booker 2,225 4.3% 5.0% 1.4% 2.3% 3.4% 4.1%
--------- ---------- --------- ---------- --------- ---------- ---------
Central Europe 1,928 (14.2)% (11.0)% (12.8)% (9.1)% (13.7)% (10.3)%
--------- ---------- --------- ---------- --------- ---------- ---------
Asia 1,933 (0.1)% (1.6)% 0.1% (1.4)% (0.0)% (1.6)%
--------- ---------- --------- ---------- --------- ---------- ---------
Tesco Bank 361 (5.2)% n/a (18.8)% n/a (9.6)% n/a
--------- ---------- --------- ---------- --------- ---------- ---------
Group 21,029 (1.4)% (0.9)% (1.7)% (0.8)% (1.5)% (0.9)%
--------- ---------- --------- ---------- --------- ---------- ---------
All sales shown on exc. VAT, exc. fuel basis. Sales change shown
at constant rates, unless otherwise stated.
Sales change at actual rates for 19-week period: Group (1.1)%,
UK & ROI 0.1%, C. Europe (16.1)% and Asia 8.0%. Further detail
in Note 1.
Dave Lewis, Chief Executive:
"In a subdued UK market we performed well, delivering our fifth
consecutive Christmas of growth.
In our Centenary year, our customer proposition was compelling,
our product offering very competitive and thanks to the outstanding
contribution of our colleagues, our operational performance was the
best of the last six years. As a result, this Christmas we had the
biggest ever day of UK food sales in our history."
Trading update (3Q: 13 weeks to 23 November 2019; Christmas
Trading: 6 weeks to 4 January 2020)
Whilst the UK environment has clearly been challenging, the
combination of our attractive customer offer and strong operational
delivery enabled us to outperform the market once again, following
on from our strong performance last year. Customers benefited from
lower prices - with a typical basket of 21 festive products in the
weeks before Christmas being GBP2.28 cheaper year-on-year - and
strong, relevant promotions, including our first ever Christmas
Clubcard Prices offer.
Over the Christmas period we outperformed the market in both
volume and value terms(2) , with a strong performance in fresh
food. Further improvements in price and quality were complemented
by our 'Festive 5' vegetable offer and an enthusiastic customer
response to our significantly expanded range of plant-based foods.
Customer satisfaction with our shopping trip further improved and
we saw our highest level of availability in six years. Our online
grocery business delivered over 14 million orders across the 19
weeks, with an increase in both average basket size and customer
satisfaction scores for the Christmas period. Our headline sales
performance for the UK as a whole included a c.(0.4)% impact from
reduced general merchandise sales as we continue to refine the mix
of our offer.
The customer reaction to the launch of Clubcard Plus in November
has been very positive. For a GBP7.99 monthly subscription,
customers can benefit from 10% off 2 big shops in-store as well as
savings on popular Tesco brands and double data on Tesco Mobile.
Later this month, subscribers will also be able to apply for a
Clubcard Plus credit card from Tesco Bank with no foreign exchange
fees abroad(3) .
In ROI, our 'You Won't Pay More' campaign supported positive
sales growth. Our online grocery business also made a strong
contribution, with nearly 15% growth in orders.
Booker's continued focus on customer service was recognised as
we were named 'Best National Wholesaler' for overall customer
satisfaction(4) in November. Whilst the market was subdued, sales
grew strongly across the 19-week period, by 3.8% excluding tobacco
(3.4% including tobacco). The acquisition of the assets of Best
Food Logistics is proceeding as planned and we anticipate
completion in early March.
Our overall sales performance in Central Europe reflects the
ongoing significant transformation of our business, fundamentally
changing our approach in Poland and re-sizing, simplifying and
improving the relevance of our businesses in the Czech Republic,
Hungary and Slovakia. Whilst the changes in Poland have had the
most significant impact, our sales performance excluding Poland
across the 19-week period of (3.7)% also reflects an impact of
c.(3)% from the combination of closures, the right-sizing of large
stores and improvements to product mix. We have continued to
strengthen our offer for customers, including improved availability
and a more compelling seasonal product offer.
In Asia, total sales were level at constant rates, as we
continue to optimise the mix of our product ranges. Our focus on
sustainable, profitable ranges resulted in a (13)% reduction in
general merchandise sales year-on-year - an impact of c.(1.4)% on
overall sales performance. We saw strong growth in fresh food
(approaching +5%) supported by a highly competitive offer for
customers in our meat and seafood ranges. New formats, such as our
new Express propositions that have now rolled out to 117 stores and
our 'ultra-convenient' E-Pop stores, performed well.
On 8 December 2019 we confirmed that, following inbound
interest, we have commenced a review of the strategic options for
our businesses in Thailand and Malaysia, including an evaluation of
a possible sale of these businesses. No decisions concerning the
future of Tesco Thailand or Malaysia have been taken, and there can
be no assurance that any transaction will be concluded. A further
announcement will be made if and when appropriate.
On an underlying basis and taking account of the impact of our
decision to exit the mortgage market in September, Tesco Bank sales
grew by 0.1% in 3Q, 1.6% over Christmas and 0.5% in the 19-week
period(5) .
Contacts
Investor Relations: Chris Griffith 01707 912 900
Media: Christine Heffernan 01707 918 701
Robert Morgan, Teneo 0207 420 3143
A call for investors and analysts will be held today at
8.00am.
Dial in number: 0800 358 9473 (toll free) / +44 (0) 333 300 0804
Access Code: 67589067#
A recording will be available on +44 (0) 333 300 0819 and access
code 301307723# until 8 February 2020.
We will report our full year results on Wednesday 8 April
2020.
Notes
1. Sales change at actual rates:
3Q Christmas 19 week period
period
UK & ROI 0.2% 0.0% 0.1%
-------- --------- --------------
Central
Europe (15.8)% (16.6)% (16.1)%
-------- --------- --------------
Asia 9.7% 5.1% 8.0%
-------- --------- --------------
Group (0.8)% (1.8)% (1.1)%
-------- --------- --------------
2. Sales outperformance relates to 5-weeks ending 28 December
2019 and is sourced from IRI Retail Advantage(TM) , global insight
providers to the retail industry. Aldi and Lidl do not submit data
to IRI and are therefore excluded from their market definition.
3. Subject to status.
4. HIM annual Wholesale Tracking Programme, which consists of
over 2,000 face-to-face interviews with retailers and foodservice
operators at cash and carry depots, and over 2,400 telephone
interviews conducted with delivered wholesale users.
5. Tesco Bank's reported sales change of (9.6)% for the 19-week
period includes an impact of c.(6)% from our decision to stop
selling mortgages. Performance for the six-week Christmas period
also includes the effect of annualising the one-off benefit of
+15.7% in the prior year relating to upfront recognition of
insurance renewals as required by IFRS 15, following a contract
renewal with our pet insurance provider. The underlying performance
quoted above of 0.1% for 3Q, 1.6% for the Christmas period and 0.5%
for the 19-week period excludes both these effects.
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END
QRTEANFPEAEEEFA
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January 09, 2020 02:00 ET (07:00 GMT)
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