Tesco is aiming to build on its strongest Christmas market share in more than a decade, as it sets its sights on a bumper 2026. The supermarket said its performance over the festive period was driven by strong sales of fresh food and its Finest own-label range, helping it capture almost 29% of the grocery market, according to Worldpanel by Numerator.
However, shares in Tesco fell by more than 6% on Thursday after analysts said third-quarter sales fell short of expectations across all markets. UK sales rose 3.2% in the six weeks to 3 January, against forecasts of 3.9%, while central Europe saw growth of just 0.8%, and the Booker wholesale chain reported a 2.1% decline in sales.
Chief executive Ken Murphy dismissed concerns, saying he was "not even remotely concerned" about the sales performance. He attributed the slight slowdown to the company's efforts to keep prices down, noting that Tesco had kept inflation "materially lower" than the industry level of 4.3% in December. The company said it still expected to deliver annual profits of about £3.1bn, at the upper end of expectations.
Murphy said Tesco had "responded very decisively" to price-cutting threats from Asda, and believed the company could continue to gain market share. Competition has intensified in January, with Asda pledging to drop prices on 2,300 everyday products below rival loyalty-card prices, and Tesco promising to keep the cost of 3,000 branded products "consistently low".
The upbeat outlook comes amid wider retail concerns, with Claire's, the Original Factory Shop and LK Bennett reportedly set to call in administrators. Murphy said consumer sentiment was mixed but employment remained resilient, and he was not concerned about the potential impact of the government's November Budget or new worker protections in the Employment Rights Act.
