2014 brings bad news for Britain's supermarkets

Tesco has announced a disappointing set of results for the Christmas and New Year period. In the UK like-for-like sales were down 2.4 per in the six weeks to 4 January. Group sales for the period fell by 1.2 per cent.

Chief executive Philip Clarke commented:

We continued to invest in the most compelling offer for the tens of millions of customers who chose to shop with us this Christmas, but further weakness in the grocery market as a whole continued to impact our performance in the UK.

Tesco has suffered due to intense competition at both ends of the retail spectrum, with discounters Aldi and Lidl at one end of the market and retailers such as Waitrose at the other.

However, Tesco was not the only major supermarket to suffer from a worse than expected Christmas. Bradford-based supermarket chain Morrisons saw like-for-like sales fall by 5.6 per cent in the six weeks to 5 January. Morrisons lost out in part due to the rapid growth online shopping where the company remains underrepresented.

Morrisons warned that full-year profits would likely be toward the lower end of analysts estimates.

Chief executive officer Dalton Philips said:

In a very tough market our sales performance over Christmas was disappointing. However we are firmly focused on driving our core business and accelerating our penetration of the fast growing channels.

However, the rollout of Morrisons convenience stores will continue at pace with a target of 200 by the end of 2014/15.