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Tesco Matches U.K. Grocery Market Growth as Revival Gathers Pace

Tesco Plc’s (TSCO) U.K. revival is gaining momentum, with the country’s largest supermarket chain matching market growth for the first time in more than 18 months, according to Kantar Worldpanel’s latest market share figures.

Spending at Tesco stores rose 3.3 percent in the 12 weeks ended Jan. 20, the same pace as the industry, the researcher said today in an e-mailed statement. Tesco’s growth exceeded nearest rivals Wal-Mart Stores Inc. (WMT)’s Asda and J Sainsbury Plc. (SBRY) The main loser was William Morrison Supermarkets Plc. (MRW)

“These results are a sign of stabilization for Tesco as the retailer gets back on track with its customers,” Kantar director Edward Garner said in the statement. “The improvement has put some pressure on the rest of the big four.”

Tesco this month reported only its second quarter of domestic same-store sales growth in eight as money-off coupons and an enhanced food offering helped spark a revival. The grocer, which has lost out to upscale chains such as Waitrose and discounters including Aldi and Lidl, is investing 1 billion pounds ($1.6 billion) to provide additional staff, refresh its own-brand products and brighten stores.

Tesco’s sales growth exceeded gains of 2.1 percent for Asda and 3.2 percent for Sainsbury, Kantar said. Spending at Morrison stores fell 1.7 percent from a year earlier, it said.

Morrison, whose stores are mostly located in the north of England, has lost shoppers amid a shift by cash-strapped consumers toward discount formats and online.

Morrison shares fell 1.2 percent to 254.1 pence at 11:47 a.m. in London, while Tesco gained 0.2 percent to 356.5 pence.

Market Share

Tesco maintained its share of U.K. grocery spending at 30.4 percent in the latest 12 weeks, compared with the same period of the previous year, Kantar said. Asda, Sainsbury and Morrison all saw their market share decline as Waitrose, Aldi and Lidl continued to make inroads on the market leaders.

Aldi was the fastest growing supermarket in the 12-week period with growth of 28 percent, bringing its market share to 3.1 percent, Kantar said. Lidl and Iceland Foods Ltd. recorded sales growth of 10 percent and 9.6 percent, respectively, pushing up their market share to 2.7 and 2.2 percent.

Grocery inflation was 4.9 percent in the period surveyed, “causing a squeeze on shopping budgets” and prompting a “heightened need for retailers to deliver value for money,” Kantar said.

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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