Tesco reported the smallest rise in Christmas sales at UK stores open at least a year since the early 1990s, as Britain's biggest retailer felt the impact of the economic downturn.
However the supermarket chain, which takes about one in every £8 sterling spent in British shops, said it was growing market share across a range of non-food items, including electricals, clothing and entertainment as shoppers desert specialist retailers in search of the cheapest prices.
Sales at British stores open for at least a year, excluding fuel, rose 2.5% in the seven weeks to January 10. That was an acceleration from the 2% growth reported for the 13 weeks to November 22, and just above an average forecast of 2.4% in a poll of analysts. Estimates ranged from 1.7-3%.
Group sales were up 11.6%, boosted by 32.7% growth in international sales. Tesco employs 440,000 people in about 4,000 stores across 14 countries. This includes over 13,000 people in 101 stores in Ireland.
Tesco said adjusting for the reduction in VAT sales tax, which came into effect in early December, growth on a comparable basis was 3.5%.
Britain's retailers are struggling as shoppers curb spending amid rising unemployment, sliding house prices and fears of a deep recession. The British Retail Consortium said today like-for-like sales fell 3.3% on the year in December, the biggest drop since the series began 14 years ago.
Analysts expect Tesco to report the weakest underlying sales growth of Britain's top four grocers this Christmas, partly due to its greater exposure to non-food lines which have been hit harder than food in the economic downturn.
Last week, J Sainsbury, Britain's third-biggest grocer, reported a 4.5% rise in like-for-like sales, excluding fuel, for the 13 weeks to January 3.
