There’s a range of responses in today’s papers to Tesco’s results. Several focus on what the dip in profits means for Fresh & Easy, the FT styling comments from Philip Clarke about the loss-making chain’s performance as a “US ultimatum”.

While Clarke yesterday stressed that there’s a huge amount of work to be done in affecting a UK turnaround, The Sun has him banging the drum about Tesco’s long-term ambitions to topple Walmart from its seemingly unassailable position atop the global rankings. “In twenty years we’ll be the world’s leading multi-channel retailer,” Clarke boomed.

More eye-catching, however, is Clarke’s brutally frank admission further into the piece that “Sainsbury’s has been ahead of us for three or four years”.

If that comment was designed to cast Tesco’s embryonic turnaround in a more flattering light, the numbers that came out from Holborn yesterday highlighted the gulf in performance.

Like-for-like sales for the quarter were up 1.9%, excluding VAT and fuel, following what Justin King called a “special summer” that featured the supermarket’s successful Paralympics sponsorship.

But that wasn’t enough to impress everyone. Collectively the analysts were in bearish mood yesterday - bears with sore heads, at that. While some tore into Tesco, Dave McCarthy of Investec was telling investors that even Sainsbury’s represented a dismal prospect, perhaps piqued that its 1.9% LFL figure had beaten their forecasts by a fairly sizeable margin.

“The underlying picture is concerning, with volume losses continuing in mature stores,” he wrote. “When we strip out inflation, growth in convenience and growth in the internet, LFL volumes are down over 3% in the core estate.” So there you have it. Discount the growing parts of the business, and it’s shrinking.

“This may mean that Sainsbury’s is not in as bad a position as its competitors, but ultimately this rate of volume decline will present major problems,” McCarthy concluded.

What King and Clarke had in common yesterday were predictions of a “Scrooge-like Christmas”, thanks to higher food prices and shoppers’ slimmer wallets.

Clarke suggested his not-so-secret weapon for the festive season would be the Everyday Value Christmas pudding. If that outdoes Heston’s annual creation for Waitrose as this year’s must-have pud, it really will be a sign of the times.

Topics