Tesco reports 2.9% drop in sales

<p>Tesco saw sales fall over the busy Christmas period.</p>

Tesco has reported a drop in sales over the traditionally busy Christmas period.

The UK's largest supermarket chain announced like-for-like sales had fallen by 2.9 per cent in the three months to the beginning of January. This added to a 0.3 per cent decline during the six weeks over the Christmas period. The results have led to the company laying out radical turnaround plans.

Tesco stated that it will be closing 43 unprofitable stores across the UK while also shelving plans to open 49 new "very large" stores. It is part of Tesco's plan to cut £250 million and reduce its overheads by 30 per cent, which has already seen the supermarket close its staff pension scheme.

It has been a year to forget for one of the most established retailers in the UK. Falling sales and profit warnings have been prominent throughout the past 12 months. Last year also saw Tesco become embroiled in a huge accounting scandal which resulted in the departure in a number of key officials.

Questions were raised of the retailer's operations when it admitted that it had overstated its half-year profit guidance by £250 million. It prompted the launch of an investigation headed up by Deloitte and was resulted in a huge drop in Tesco's share price which fell by 11.6 per cent and wiped £2.2 billion from its value.

Dave Lewis, group chief executive, said: "We have some very difficult changes to make. I am very conscious that the consequences of these changes are significant for all stakeholders in our business but we are facing the reality of the situation.

"Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results."

Despite the fall in sales and potential closures, Tesco's share price grew by 6.21 per cent as of 09:00 GMT on Thursday (January 8th).

Find up to date information on the FTSE 100 and spread betting strategies at City Index.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.