Morrisons shopper in free from aisle

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Grocery sales have cooled off following record summer growth, as shoppers tightened their purse-strings ahead of the Christmas season, according to latest sales figures.

Supermarket sales growth for the 12 weeks to 7 October slowed to 3.2% up on the same period in 2017, but remained over 3% for the fourth period in a row, according to Kantar Worldpanel data.

The discounters and the Co-op were the only bricks and mortar retailers to gain market share over the period, at the expense of the big four.

Tesco lost 0.6 percentage points (pp) as its market share dropped to 27.4%, despite strong sales for its ‘Exclusively at Tesco’ range.

“Despite widespread interest in the September launch of its discounter concept, Jack’s, the small number of stores planned means it won’t impact on Tesco’s market share without a significant expansion,” commented head of retail and customer insight at Kantar, Fraser McKevitt.

“Within the main supermarket ‘Exclusively at Tesco’ lines continue to be a real bright spot, with 41% of British shoppers buying one of these products during the last 12 weeks, spending a combined £102 million.”

The Co-op continued to perform well, with sales up 7% for the 12 weeks, showing that an extra 265,000 households visited the retailer.

Aldi once again recorded the strongest growth, with sales up 15.1%, its fastest rate of growth since January, driven by 29% sales growth in poultry and 24% growth in the dairy category.

Lidl also recorded double figure growth, as sales grew 10% to give it 5.6% market share.

Asda and Morrisons both grew sales 2.4% over the period, while Sainsbury’s maintained slower growth, at 0.6%, resulting in a 0.4pp fall to 15.4% market share.

Growing ahead of the market, Ocado and Iceland sales were also up by 7.5% and 4.8% respectively.

New Nielsen data also showed a significant slowdown in the four weeks to 6 October following the record summer of spending.

Grocery sales growth for the past month slowed to 1.9%, slowing down from 2.4% growth in August-September.

Mike Watkins, Nielsen’s UK head of retailer insight, said: “The beginning of autumn has signalled an objectively disappointing, though not entirely unexpected, slowdown in sales.

“But keeping in mind retailers had such a strong summer period, it’s likely shoppers are pressing the reset button after a season of excess.”

Morning update

British American Tobacco (BATS) has warned that full year earnings are to dive 7% as a result of currency headwinds.

In a trading update ahead of analyst meetings, the tobacco giant also cut its target revenues for heated tobacco sales from £1bn to £900m, due to a reduction in planned year-end stocks in Japan and a US product recall.

However, it said its Vuse, Vibe and Alto products are performing well in the US while its Vype brand is continuing to grow e-cigarette market share, with its recently launched E-pen 3 product.

BAT expects cigarette sales volumes to drop 3.5% for the full-year, with a 4-4.5% decline in the US, despite projected improvements in the second half.

“I am delighted with the progress we are making with our Potentially Reduced Risk Products business and we have a great pipeline of new product launches over the coming months which will build on this success,” said CEO Nicandro Durante.

At the same time, our combustible tobacco business continues to perform well. We remain on track for a strong performance in 2018.”

Elsewhere, Dutch supermarket giant Ahold Delhaize has repurchased 1,780,000 shares over the past week period for around €34.3m as it continues its significant share buyback programme.

The repurchases were made as part of the €2 billion share buyback program announced in November 2017.

In the markets, the FTSE 100 has remained flat this morning at 7,029pts as Brexit and the US share slump distract investors.

This morning’s early risers include Ocado Group (OCDO), up 5.4% to 832.8p, Kerry Group (KYGA), up 2% to 91.3p, and Stock Spirit Group (STCK), up 1.3% to 199p.

Early fallers include McBride (MCB), down 2.5% to 125p, Just Eat (JE.), down 1.4% to 612.2p and unsurprisingly British American Tobacco, down 0.9% to 3,330.5p.

Yesterday in the city

Despite a mid-morning slump, the FTSE 100 started the week well, rising 0.5% to 7,029pts as Brexit jitters appeared to calm.

Sandwich maker Greencore (GNC) dropped 8.9% to 189.1p as the markets reacted badly to the sale of its US business to Hearthside for £817m.

Other fallers included Treatt (TET), down 4.4% to 444.5p, McBride (MCB), down 3.7% to 128p, Fevertree Drinks (FEVR), down 3.6% to 2,850p and Premier Foods (PFD), down 3.3% to 40.1p.

Potato supplier Produce Investments was one of the top performers, jumping 5% to 190p.

Other risers included Imperial Brands (IMB), up 2.8% to 2,587p, GlaxoSmithKline (GSK), up 2.4% to 1,463p, CARR’s Group (CARR), up 2% to 157p and Hotel Chocolat (HOTC), up 1.8% to 275p.