UK retailers Sainsbury’s, Tesco and Marks & Spencer posted this week strong Christmas sales data as Omicron boosted demand for at-home celebrations, but the sector nevertheless remains blighted by ongoing Covid uncertainty.
The nation’s biggest retail giant Tesco on Thursday lifted its annual profit forecast after posting a 3.2-percent sales increase over the festive period, or six weeks to January 8, compared with a year earlier.
“Once again, Covid-19 led to a greater focus on celebrating at home,” said Tesco Chief Executive Ken Murphy in a statement.
Sales rose 8.7 percent when compared with pre-pandemic 2019 according to the supermarket giant, which added it had shrugged off ongoing cost pressures and supply chain challenges.
The news came one day after supermarket rival Sainsbury’s also reported “strong” Christmas grocery volumes and market share growth — and also upgraded profit guidance.
“I am really pleased with how we delivered for customers this Christmas. More people ate at home,” said Sainsbury’s Chief Executive Simon Roberts in a trading update.
Meanwhile on Thursday, high street chain Marks & Spencer logged higher clothing sales and a record food performance for the period.
Total sales leapt almost a fifth in the 13 weeks to January 1 compared with last year, and rose almost 9.0 percent compared with 2019.
“The spread of Omicron does appear to have boosted the fortunes of the grocers even further,” noted Hargreaves Lansdown analyst Susannah Streeter.
“The spread of the new variant, the fear of infection and the mass cancellation of Christmas parties drove consumers yet again back to the home for their social lives.”
However, Streeter also warned that the outlook remained uncertain due to the Omicron coronavirus variant, simmering inflationary pressures and runaway domestic energy costs.
“A bumper December of this level for the grocers may be hard to replicate,” Streeter said.
“There is also much uncertainty ahead about shoppers’ habits, given the income squeeze, and it’s unlikely baskets will continued to be piled high with expensive treats, making the battle over value that bit more competitive.”
The British Retail Consortium warned last week that restrictions imposed in the wake of the Omicron variant had “wiped out” much of a recent recovery enjoyed by UK bricks-and-mortar stores.
It comes as UK businesses and consumers also face mounting fallout from surging inflation, including higher interest rates.
Much of the progress made in late 2021 “was wiped out in December as surging Omicron cases and new work-from-home advice deterred many from shopping in-store, particularly in towns and city centres”, said BRC chief executive Helen Dickinson.
