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LONDON — Tesco, Britain's largest supermarket group, on Thursday reported disappointing sales in its home market over the holiday period, causing its shares to slump on the London stock exchange.
Tesco, the world's third-largest retailer, said U.K. sales were up just 0.6 percent in the six weeks ending on Jan. 8 on a like-for-like basis, which strips out the contribution of new stores or expanded space. Tesco said the weather particularly dampened nonfood sales as many customers chose not to drive to larger stores.
Tesco shares were down 2.8 percent to 411.85 pence in early trading on the London Stock Exchange.
"This below-par performance from Tesco will raise an eyebrow or two in the market and the industry given that management indicated at the Q3 stage that the company was entering the Christmas trading period a little ahead of expectations," said Clive Black and Darren Shirley, analysts at Shore Capital Stockbrokers.
The company said total sales were up 6.2 percent at constant exchanges rates. Tesco's expanding Fresh 'n' Easy stores in the United States reported a 30 percent increase, and sales by its Asian operations were up 10 percent. Tesco did not report like-for-like data for the international operations.
"Anemic sales growth within its core U.K. market is a disappointment, particularly given the fact that the severe weather conditions actually provided a positive opportunity for the likes of Sainsbury," said Richard Hunter, head of U.K. Equities at Hargreaves Lansdown Stockbrokers.
"This comparative weakness has been seized upon by investors, which is a testament to the outperformance which the market demands from Tesco."
Analysts said Sainsbury's appeared to have moved past Wal-Mart's Asda supermarkets to rank a still-distant second in market share behind Tesco.
Sainsbury's this week reported like-for-like growth of 3.6 excluding fuel in the 14 weeks to Jan. 8. Morrisons supermarkets reported sales up 1 percent on a comparable basis for the six weeks to Jan. 2.
