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, economics editor Article written by Robert Peston Robert Peston Economics editor

Why Coe is set to win BBC race

Why Lord Coe is likely to be next chairman of the BBC Trust, but he may be its last chairman (at least of the Trust as currently configured).

Read full article

More on This Story

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -28

    Comment number 423.

    Had an Aldi open near me recently.The flyer through the door had not a thing on it I would touch. A relative went to look, had to use Waitrose car park as Aldi too small and had no space, also came out with nothing, very disappointed, just hype, nothing cheap or good. Perhaps they suit old fashioned people who will shop at several places just to get the odd item in each. Tesco on line far the best

  • rate this
    -26

    Comment number 288.

    Very sad to see these shops decline. I think its time to regulate and enforce a minimum food price so that the concept of cheap supermarkets no longer exists - food is too cheap!! WE SHOULD ALL BE PAYING MORE! Maybe this will stop us from all being fat, greedy and wasteful slobs.

  • rate this
    -20

    Comment number 264.

    245.Roland Butter
    As a business owner I can say hand on heart there is no recovery

    That depends on what business you are in. These results show that if you are forward thinking and adapt to new technology and markets you can be successful, if you don't, like Tesco and M&S, you face decline. The problem with too many of the moaners on this site is that they live in the past.

  • Comment number 29.

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

  • rate this
    -14

    Comment number 401.

    Let's be honest.
    The reason why more people are shopping at Aldi and Lidl is because they're cheap.
    It's nothing to do with quality.
    Most people who shop there couldn't tell quality if it hit them in the mouth.
    They're cheap because the quality is poor and the wages are even poorer.
    Stop fooling yourselves!
    Alan

 

Comments 5 of 776

 

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.