Uncertain inflation and cost outlook weighs on Tesco and M&S shares

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Inflation uncertainty and rising costs have weighed on shares in the leading retailer although Tesco reported it delivered its “biggest Christmas ever” and food sales at M&S ​​rose by around 9 per cent over the festive period.

tescoLike-for-like sales, excluding VAT and fuel, rose 3.1 percent in the 19 weeks to Jan. 4, helping the company achieve its highest market share since 2016 at 28.5 percent, according to industry data from Kantar. Its upmarket Finest range performed strongly during the period, with sales up 15.5 per cent.

Tesco chief executive Ken Murphy said: “What we’re not saying is ‘no inflation’. “What we’re saying is, ‘We’ll do our best to mitigate the impact’,” he added as the UK’s top retailer maintained its full-year guidance of £2.9bn in retail adjusted operating profit, its preferred metric.

He confirmed a £250m a year hit from extra national insurance costs after the Budget in October but insisted Tesco would work hard not to pass on price inflation to shoppers.

Shares were down 2.7 per cent at 359p in morning trading.

Murphy said consumer sentiment was “balanced” after a year of improving confidence, although he expected shoppers to focus more on value in January after Christmas spending.

M&S Shares fell 6.4 per cent to 352p as the company warned the outlook for the year ahead remained “uncertain” as the business faced “well-documented” higher costs. tax increase”

This was despite better-than-expected food sales, which rose 9 per cent in the 13 weeks to December 28. Analysts had expected growth of just under 8 percent.

“Records were broken for business sales, with food having its biggest day and clothing, home and beauty having its biggest week ever recorded online,” chief executive Stuart Machin said, adding, “More customers are ticking off their entire shopping list. Given the strong growth in core category sales at M&S.