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Monday, January 18, 1999 Published at 15:47 GMT

Business: The Company File

Tesco tills rake in the money

Tesco is Britain's biggest retailer

Shoppers flocked down the aisles of the UK's biggest supermarket chain, Tesco, over Christmas and the New Year.

Unlike many retailers, who recorded a disappointing Christmas, Tesco reported a 7.4% increase in its sales during the six weeks covering Christmas and the New Year.

Its widely speculated that shoppers could have been taken from its rival chain Sainsbury, which has yet to report its seasonal sales.

Elsewhere, many retailers have had patchy sales during what should be the busiest time of the year.

Tills busy ringing

Even Marks and Spencer has struggled but it could be that the oft-quoted adage that people still have to buy food during a recession is holding true.

Tesco sales increased by 4.1% after taking into account increased shelf space.

[ image: Shoppers turned out at Christmas]
Shoppers turned out at Christmas
Chief Executive Terry Leahy said the company was moving forward in difficult and highly competitive conditions.

Analysts said that Tesco had produced good figures, but warned that profits might still come in slightly below expectations of around £870m.

"We view them as extremely solid," said Clive Black, of Charterhouse Tilney.

Sales for the 20 weeks to the end of the year were up 6.5%, or 3.1% on a like-for-like basis.

But Tesco shares nevertheless fell on the London Stock Market owing to profit-taking.

A Christmas for necessities

Budgens, the discount supermarket chain, also announced strong results up to Christmas. Sales increased in November and December by 3% excluding new store openings.

Announcing its half-year results, the supermarket group said it had increased profits by 10% to £6.4m on the back of increased sales in the six months to November of 18%.

The company was investing in link-ups with petrol stations and in converting its 7 Eleven convenience stores into the B2 format, and has also acquired computer-based home shopping firm Teleshop.

More food retailers are to announce their Christmas trading statements in the next week.

But the trend so far confirms the sharp differences in retailers' fortunes this Christmas.

People spent more on necessities like food and medicines, or on electrical goods that were considered good value this year, like computers.

Boots, Dixons, and Woolworths all had a good Christmas. But luxury items suffered, with sales of jewellery, clothing, and household goods all extremely weak.

With consumer confidence still fragile, Tesco's results could begin to look even better in a few weeks.

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