Britain's Tesco matches rivals with Christmas sales surge

LONDON (Reuters) - Tesco, Britain’s biggest retailer, on Thursday followed rivals in reporting buoyant Christmas trading, as pandemic restrictions meant people splashed out on celebrations at home.

The group said UK like-for-like sales growth was 6.7% in its third quarter to Nov. 28, accelerating to 8.1% in the six weeks to Jan. 9.

“We delivered a record Christmas across all of our formats and channels,” said CEO Ken Murphy, who succeeded Dave Lewis in October.

Tesco’s update follows strong Christmas trading reports from No. 2 Sainsbury’s, No. 4 Morrisons and No. 7 Lidl GB.

Industry data published last week showed the supermarket sector benefited from unprecedented Christmas demand, with shoppers spending 11.7 billion pounds ($16 billion) on groceries in December.

Restrictions to contain the virus mean many people are working from home and the hospitality sector is closed.

Adding to the demand for food and drink, many of the five million or so Britons who normally travel abroad for Christmas had to stay at home.

Tesco estimated additional COVID-19 costs would be 810 million pounds in its 2020-21 year, up from 725 million pounds forecast in October.

But it still maintained its guidance for 2020-21 retail operating profit before exceptional items of “at least” the same level as 2019-20’s, excluding the repayment of 535 million pounds ($729.3 million) of business rates relief.

Tesco also continues to expect to report a loss for Tesco Bank of between 175 million and 200 million pounds for the year.

Shares in the group, down 3% over the last year, closed Wednesday at 242.1 pence, valuing the business at 23.8 billion pounds.