Tesco and M&S report strong Christmas food sales

Retail giants Tesco and Marks & Spencer have both reported a rise in food sales over Christmas, but other retailers found the festive period harder going.

Tesco said sales in the UK were up 3.2% from last year and it had now notched up its highest market share in more than a decade.

M&S said that it had seen a record number of customers over Christmas and its food sales were "strong", although sales in its clothing, home and beauty products business fell.

There was little festive cheer for the owner of Primark, AB Foods, which saw its shares sink more than 10% after it said sales at the fashion chain had been weaker than expected in a "difficult market".

The Christmas period is considered a key time for many retailers as it can account for a significant part of their annual sales and profits.

M&S said food sales were up 5.6% in the three months to 27 December, which boss Stuart Machin said was down to its "Christmas hero lines". The company also pointed to its Italian ready meals, in-store bakery and deli as areas of growth.

"Food sales were strong and the business continues to outperform, hitting a new market share milestone in the period," Machin said.

However, the retailer said consumer confidence was "fragile". It blamed the 2.9% drop in sales at its clothing, home and beauty business on lower footfall on the High Street as well as lingering issues from last year's cyber-attack, which caused problems with stock and inventory.

Sofie Willmott, associate director at GlobalData Retail, said rival fashion chain Next - which reported strong Christmas sales earlier this week - seemed to have retained the customers it gained from M&S's near-shutdown after the cyber-attack.

Tesco boss Ken Murphy said he was "delighted" with the supermarket's performance over Christmas amid "intense" competition.

The firm said food sales were up 5.2% with particularly strong sales of fresh produce and party food.

Murphy highlighted the performance of the Tesco Finest range, which saw sales growth of 13%.

"There's no doubt that consumer sentiment is mixed, that you are seeing consumers whose household budgets are in pretty good shape, and then you're seeing a lot of people that are really counting every penny," he said.

The supermarket is now expecting to report annual operating profits at the upper end of the £2.9bn-£3.1bn range it predicted in October.

GlobalData Retail's Sophie Willmott said: "Tesco has seen a consistently strong performance over the last couple of years really, where it's really focused on price."

She said that by price-matching Aldi, and offering lower prices to its Clubcard holders, Tesco had "managed to retain its number one position at the top of the market", despite heavy discounting on some of its products to compete with rivals.

"It also saw very good performance in its Finest range where shoppers are maybe not eating out as much or treating themselves," she added.

Despite Tesco's latest profit guidance, "many had been hoping for a bigger upgrade", said Aarin Chiekrie, analyst at Hargreaves Lansdown, adding that the group's performance had been dragged down by its wholesale business, Booker, which suffered from a decline in tobacco sales.

That disappointment was reflected in Tesco's share price, which fell nearly 6%.

But shares in AB Foods, the owner of Primark, sank 11% after it said the fashion chain had seen a "challenging start" to the financial year.

While Primark's UK sales grew 1.7% in a "difficult" market over the four months to January, sales in Europe dropped 5.7%.

AB Foods - which also has food business that contains brands such as Twinings, Ovaltine and Ryvita - said earnings would be lower than forecast, sending its shares down more than 10% in early trading.

Bakery chain Greggs also released a trading update, which said sales at company-managed outlets were up 2.9% on a like-for-like basis.

However, it warned consumer confidence was "subdued" and profits this year would be at a "similar" level to 2025. Shares in Greggs fell 9%.