By Aimee Look and Joshua Kirby
British consumers' spending on food shored up revenue for U.K. retailers over a Christmas shopping season clouded by weak outlay on other goods.
Tesco and Marks & Spencer on Thursday reported sales for the festive period, a key time for the sector, that showed stronger performance in food than in clothes and other goods. Many U.K. grocers see their biggest share of sales during the period and make use of promotions and discounts for a boost.
Grocery sales have been a bright spot in retail, with U.K. shoppers having spent more than ever on groceries in December as inflation in the sector cooled, according to a report from data collector Worldpanel released Tuesday. Sales for U.K. grocers reached 13.8 billion pounds ($18.57 billion) for the four weeks through Dec. 28, a 3.8% increase from the same period in 2024.
That's despite a tough year overall for U.K. retailers, who have had to reckon with high inflation and wider economic uncertainty that have kept shoppers cautious about their outlay. In November, the most recent month for which there is data, sales volumes slipped by 0.1% from a month earlier, including a fourth-straight decline in supermarket sales, according to data from the U.K. statistics agency.
Tesco's group like-for-like sales over the Christmas period trailed behind its results for the third quarter, increasing 2.4% and 3.1% on year, respectively. Like-for-like fresh food sales for the British grocery retailer were up 6.6% in the U.K., while sales for its home & clothing arm in the country were up 2.1% for the 19 weeks ending Jan. 3.
The grocer said it expects to meet the higher end of guidance for adjusted operating profit, between 2.9 billion pounds and 3.1 billion pounds, for the fiscal year ending February.
Tesco is up against mounting expectations from investors and rising price wars in the U.K. grocery segment, making it trickier for it to exceed the market outlook, analysts say. Shares slumped 6% to 425.3 pence in midday European trade Thursday.
Its like-for-like sales missed the mark, with the gap being largely attributable to weaker-than-expected Christmas sales, J.P. Morgan analysts said in a note to clients.
Tesco's high-street rival Marks & Spencer booked similar trends during Christmas. M&S's food revenue grew 6.6% on year over the 13 weeks to Dec. 27, the company said Thursday, while the fashion, home & beauty business saw sales slide back by 2.5%.
That disparity in performance between food and fashion will disappoint investors who hoped M&S "had finally cracked the right formula to look smart with clothing," AJ Bell markets head Dan Coatsworth wrote.
"The clothing arm had a poor festive period, and it was telling that M&S held a bigger than usual sale to help clear stock," Coatsworth said.
Retail-heavy Associated British Foods, meanwhile, gave a profit warning and said its Primark fashion business had a difficult start to the fiscal year, citing weaker performance continental Europe. Shares dropped 11.5% to 19.03 pounds--the lowest level in nine months.
The British arms of Lidl and Aldi earlier this month said they had their best Christmas ever, with sales up 10% and 3%, respectively, in the four weeks to Christmas Eve. J Sainsbury is due to give an update on Friday.
Write to Aimee Look at aimee.look@wsj.com and Joshua Kirby at joshua.kirby@wsj.com
(END) Dow Jones Newswires
January 08, 2026 06:50 ET (11:50 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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