Uncertain inflation and cost expectations are weighing on Tesco and M&S shares

Open Editor’s Digest for free

Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.

Uncertainty over inflation and rising costs weighed on shares of major retailers despite Tesco announcing it had its “biggest Christmas ever” and food sales at Marks & Spencer growing by around 9 per cent over the festive period.

TescoLike-for-like sales, excluding VAT and fuel, rose 3.1 per cent in the 19 weeks to January 4, helping the company achieve its highest market share since 2016 at 28.5 per cent, according to industry data from Kantar. Its Finest luxury range performed strongly during the period, with sales up 15.5 per cent.

“What we’re not saying is there won’t be inflation,” Tesco chief executive Ken Murphy said. “What we are saying is that we will do everything we can to mitigate the impact,” he added, while the UK’s largest retailer maintained its full-year guidance of £2.9 billion in adjusted retail operating profit, his preferred measure.

He confirmed that £250 million a year in additional National Insurance costs had been collected after the Budget in October, but insisted Tesco would work hard not to pass inflation on to shoppers.

Shares fell 2.7 per cent to 359 pence in morning trading.

Murphy said consumer sentiment was “balanced” after a year of steady improvement in confidence although he expected shoppers to focus more on value in January after Christmas spending.

Ms The company’s shares fell 6.4 per cent to 352p, as the company warned that the outlook for next year remains “uncertain” as the company faces higher costs “from well-documented sources”. Tax increases“.

This came despite food sales being higher than expected, rising by 9 per cent in the 13 weeks to 28 December. Analysts had expected growth of just under 8 percent.

“Sales records were broken across the company, with food recording its biggest day, and apparel, home and online beauty its biggest week,” CEO Stuart Machin said, adding that “core category sales grew strongly with more customers registering Your entire shopping list. In M&S.”