Tesco boss backs pubs fighting business rates raid and warns customers are 'counting every penny'
The boss of Tesco has said that many customers are still ‘counting every penny’ as it posted weaker than expected Christmas sales.Tesco said UK sales rose by 3.2 per cent in the six weeks to 3 January as it enticed customers with more premium label products. Meanwhile, sales in the third quarter before the Christmas period increased 4 per cent in the 13 weeks to 22 November.But the Christmas sales boost was smaller than investors had hoped for, trailing the 3.7 per cent reported across the UK and Ireland for the same period last year, sending Tesco shares down 6 per cent today. Tesco boss Ken Murphy, who took the reins in October 2020, also lent his support to pubs facing massive business rate hikes and said the government should look at a total rethink of the system.Speaking ahead of reports that Labour will back down on business rate hikes for pubs, he said: 'I believe that the government needs to look at the rate system overall and reform it properly.'He called the rates system ‘fundamentally unfair’ and said that retail and hospitality pay a disproportionate amount of the property tax, with pubs and restaurants particularly hard hit.He said: ‘They are suffering from the end of the Covid era relief that they had... and their rates bills are also going up.' Tesco boss Ken Murphy said customers are still 'counting every penny' after lower-than-expected Christmas salesTesco now expects annual profits of between £2.9billion to £3.1billion - the higher end of its earlier forecasts - amid what Murphy dubbed a ‘relentless’ price war.Lale Akoner, global market analyst for eToro, said that ‘growth is becoming harder to sustain in a more price-sensitive consumer environment’.He added: ‘UK like-for-like sales missed market expectations, reflecting cautious household spending and intensifying competition from discounters, which triggered a sharp negative share price reaction.’The grocer has benefited from a boom in at-home dining, with its Tesco Finest premium range seeing sales rise 13 per cent. Sales in its party food range saw ‘particularly strong growth’ of 22 per cent as it sold 21 million Finest pigs in blankets, plus 2.5million bottles of Finest Prosecco.Tesco said it had also added customers with its Aldi price match and Clubcard scheme, which helped group sales rise 3.6 per cent to just under £25billion over the 19 weeks to 3 January.Tesco now holds its biggest slice since March 2015, with its market share rising to 28.7 per cent, according to a report by industry experts Worldpanel. Murphy said the grocer had poached customers from across the market but that the biggest gains had been from struggling rival Asda.‘The competitive intensity of this market is extraordinary - it's relentless,’ he said.‘There's no doubt that consumer sentiment is mixed…you are seeing consumers whose households are in pretty good shape and then you're seeing a lot of people that are really counting every penny,’ he added.‘Value continues to be a key priority as customers seek to make their money grow further and we're determined to do everything we can to help.’This week, Tesco announced it had revived its blue and white stripe 'value' range as it steps up its price war with rivals. It said it will keep prices low on 3,000 household staples including Weetabix, Fairy Liquid and Heinz baked beans. Sainsbury's and Asda – Tesco's biggest rivals – have seen market share fall, as discounters Aldi and Lidl gain customers.In April, Tesco said it expected to make as much as £400million less profit as the competition between grocers hots up. DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
Share or comment on this article:
Tesco boss backs pubs fighting business rates raid and warns customers are 'counting every penny'
