Tesco, Morrisons and M&S: Ouch

Tesco and Morrison signs

The patchy nature of a recovery in spending by households is shown in a fall in underlying sales at three of the UK's biggest and most famous retailers, Tesco, Morrisons and Marks & Spencer - while there were rises at Greggs and New Look.

What is also evident is the very fast growing importance of online sales, especially via mobile phones and tablets.

Worst results were from Morrisons, which has the smallest online presence. Its so-called like-for-like sales fell 5.6%.

At the market leader, Tesco underlying sales in the UK fell 2.4% in the six weeks of Christmas and overseas sales were down 3.6%.

But Tesco's online sales in Britain were a big £450m, up 14%.

As for Marks & Spencer, its underlying sales in core general merchandise fell a worse-than-expected 2.1% over three months - because few bought winter clothes in warm October - but nudged up slightly, by 0.5%, in the last two months.

Strikingly - and perhaps embarrassingly for Morrisons and Tesco - M&S's food sales were 1.5% higher on a like-for-like basis over the eight weeks of Christmas, and 1.6% higher over the third quarter of its financial year.

So when you pull all this together, what does it mean for the owners of these large businesses?

Well Morrisons has warned that its profits will be at the lower end of expectations, as a result of its "disappointing" sales performance.

By contrast, Marks says that an improvement in the profitability of its food sales will offset a squeeze in clothing and homeware.

Marks and Spencer, Liverpool

Start Quote

A retailer without a substantial online presence... is on a fast road to obsolescence”

End Quote

As for the Tesco leviathan, it still expects trading profit to be in the range of £3.2bn to £3.4bn.

Even so, today's results confirm the structural difficulties faced by all three of these giants - which is why, at a time of rising household consumption, none are benefiting as Next, John Lewis and (to a lesser extent) Sainsbury have done.

And the more general industrial picture?

It is important to note that households are currently splashing out on bigger and more expensive items, such as electronics, DIY and cars, but are still being very careful and cautious in their everyday expenditure on food and clothing.

But there is bigger lesson - which is that a retailer without a substantial online presence, including mobile, is on a fast road to obsolescence.

Morrisons, slightly plaintively perhaps, points out that the first deliveries from Morrisons.com start tomorrow.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 776.

    "The patchy nature of a recovery in spending by households"

    Household spending has been growing steadily since the middle of 2009. It is the real value of that spending, not the absolute amount, which has been flat or falling. So it's not the recovery in spending that has been "patchy" (although there are always winners and losers), but consumer inflation.

  • rate this

    Comment number 775.

    Why not provide cheap funds for small business ?
    But wait, didn't they cut funding to Business Link et al ?

  • rate this

    Comment number 774.

    4 Hours ago

    Two points:

    1) I was referring to cost and glass ceilings.
    2) Education should be for students, not business (just as research benefits society when not tied to commercial concerns).


    How is it an advantage to have products developed by uneducated people without the benefit of research?

  • rate this

    Comment number 773.


    If only it was that simple.

  • rate this

    Comment number 772.

    Mr Peston is paid handsomely by the BBC and is obliged peddle their negative spin on all things (current) Government. Dear old Steph was worse but thankfully she has toddled off to pastures red ... These are gifted writers who know exactly the effect their words have. 'The Patchy nature of the recovery..." sets the BBC policy message and why it was deliberately placed at the start. Same Old.

  • rate this

    Comment number 771.

    "On-line selling" is not a new idea; it`s just the modern version of the mail-order catalogue, and it has its disadvantages. It`s not the be-all and end-all that Mr Peston is making it out to be,
    It will run its course and fizzle out when other business methods come along, as they always do.

  • rate this

    Comment number 770.


    Two points:

    1) I was referring to cost and glass ceilings.
    2) Education should be for students, not business (just as research benefits society when not tied to commercial concerns).


    It's a rationalisation of a poor ideology. Ho hum.


    Completely agree. That argument supports a limit on size needs to be imposed. Sufficient players are required for competition as a model.

  • rate this

    Comment number 769.

    example abound:

    I should have been more specific: examples please of politicians who have pushed a particular cause and then gone to work for the beneficiaries.

  • rate this

    Comment number 768.

    No, Robert. It is evidence of switching to the internet and to real quality or real value.

  • rate this

    Comment number 767.


    I think you and you rotten don't care philosophy are verging on evil!

    Inequality matter no matters what its cause.

    History is full of right wing regimes that took you attitude and their societies crashed and civil war broke out.

    Inequality matters no matter how it is caused - its cause is irrelevant to the result!

  • rate this

    Comment number 766.


    It is genuinely frightening to see how many people don't/won't see what goes on around them.

    I guess the paid bloggers from big business are here in droves!

    But they should ask themselves why their banks are bust and killed the Western Economy?

    I suggest they examine the way that banks 'paid' for academic research to permit them to be insane & call it sane!

    This also killed your firm!

  • rate this

    Comment number 765.


    That's why the best model is a mixed one, a capitalist free market model but with a compasionate social conscience. That's why the UK tends to stay close to the centre ground with the occassional shift left or right, but always coming back to the centre. Extremes of either left or right both have deep flaws.

  • rate this

    Comment number 764.

    735's score...

    It does beggar belief that there are people so blind they cannot see & so ignorant that they didn't notice that no bankers have gone to jail for robbing the people blind - just got bigger bonuses.

    Why did that occur?

    Because the law has specific loopholes designed to help them.

    What of the inducements paid to foreigners to buy stuff - they get prosecuted in the USA not here!

  • rate this

    Comment number 763.

    753 CO Socialist Models

    Business can be run co-operatively and with social responsibility - often quite successfully - however nothing does innovation as well as organisations competing for customer satisfaction. When customer power is removed as in large monopolies (state or private) service quality and innovation tend to stagnate. Supermarkets either satisfy customers or go bust.

  • Comment number 762.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 761.

    746.Truth logic sustainability the final frontiers

    You are what you eat.

    It may help if people read the ingredient labels on Aldi/Lidl & stores own brand low value foods


    But hang on a mo' - Germans buy & eat ALdi & Lidl stuff.

  • rate this

    Comment number 760.

    The introduction of competition will make that harder for my children.

    I don't see that. Keeping on the adapting thread, it is more the failure of the state education system to adapt a curriculum relevant to the modern business needs.

  • rate this

    Comment number 759.

    My local M&S didn't have the size trousers I wanted but offered to get them. The system then said they would have to go to my home incurring a delivery charge rather than be delivered to the store. Apparently this has been a constant problem and means people are not passing displays and potentially buying. The wisdom of the assistant saved this sale but I did wonder how many others have been lost.

  • rate this

    Comment number 758.


    I grew up on a rough estate and ended up with a good degree and have a good job. The introduction of competition will make that harder for my children. I guess they may become victims.

    I have no quibbles with your assessment on adaptation. The attack on socialism however is pure political posturing and entirely unrelated. 400ch isn't enough for comprehensive literary criticism, sorry.

  • rate this

    Comment number 757.

    @752. Fact is, we've a national increase in the birthrate in the UK, so MC should profit from that overall...& yet??

    However they're not alone,as the article suggests. Remiss of me in forgetting to mention that Debenhams have also issued a profits warning recently.


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