Tesco announces better than expected Christmas and sale of Blinkbox to Talk Talk

Tesco has reported better-than-expected results for its third financial quarter, with like-for-like sales down 2.9%, and just 0.3% for the six-week Christmas period, while announcing drastic cost-cutting measures including 43 store closures and the sale of its Broadband and Blinkbox business to Talk Talk.

Tesco: announces better-than-expected Christmas sales
Tesco: announces better-than-expected Christmas sales

The supermarket is also scrapping plans for 49 new store openings and closing its famous Cheshunt head office.

Tesco’s minimal decline in sales for the 19 weeks ending 3 January compares favourably to the previous quarter’s 5.4% decline, helped by a stronger-than-forecast Christmas.

Under the direction of group chief executive Dave Lewis, Tesco has achieved £250m-per-year savings (at a cost of £300m) thanks to restructuring and simplifying store management.

The offloading of Tesco Broadband and Blinkbox characterise Lewis’s moves to strip the business back to its core, while the appointment of advisors to "explore the strategic options for the Dunnhumby business" signals plans for further divestment.

Tesco had a relatively happy Christmas, achieving positive like-for-like volume growth in fresh food for the first time in five years. It credited promotions such as its Festive Five deal that reduced prices of key products to 49p.

The retailer also said Black Friday deals resulted in "highest week of sales on record" for Tesco Direct, contributing to 22.2% like-for-like sales growth in online merchandise for the Christmas period.

In a surprise move, the group said it will consolidate its head offices into Welwyn Garden City and close down its Cheshunt HQ in 2016. Meanwhile, the company will close 43 unprofitable stores and is scrapping plans for 49 new store openings.

The supermarket has also appointed Halfords Group chief executive Matt Davies to the UK and Ireland chief executive officer as of 1 June.

Lewis said the business was benefiting from listening to its customers and thanked staff for their "unique combination of retail expertise and real passion for the customer".

He said: "There is more to do but we have taken the first important steps in the right direction. We have some very difficult changes to make.

"I am very conscious that the consequences of these changes are significant for all stakeholders in our business but we are facing the reality of the situation.

"Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results."

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