Sector movers: Tesco leads grocers higher on customer-service push, strong data
A surge in the share price of supermarket giant Tesco gave the UK food and drug retail sector a big boost on Thursday, as investors reacted to upbeat economic data and showed optimism about the company's turnaround efforts.
Food & Drug Retailers
3,705.02
17:10 19/04/24
FTSE 100
7,895.85
16:59 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
Morrison (Wm) Supermarkets
286.40p
16:55 26/10/21
Sainsbury (J)
258.80p
16:40 19/04/24
Tesco
281.40p
16:59 19/04/24
Figures released on Thursday showed that the annual rate of retail sales growth in the UK accelerated strongly to 6.4% in November, compared with a revised 4.6% the month before.
This was the strongest year-on-year growth registered in over a decade and surprised the market, which was only looking for an increase of 4.5%.
Tesco's stock finished the session up 4.6% at 175.8p with investors clearly responding positively to the company's announcement on Wednesday that it would be “step[ping] up customer-service efforts” ahead of Christmas.
Some 400 stores will have extra teams of bag packers and all large shops will also have a “dedicated greeter at the store entrance”.
6,000 new staff have now joined the retailer since October and its Customer Service Centre has recruited over 850 seasonal workers.
Analyst Clive Black from Shore Capital welcomed the measures, saying that the retailer is "striving to better set up stores, assisted by a night shift in some cases, and build availability".
Meanwhile, Black said that the so-called ‘limited assortment discounters’ (LADSs) such as Aldi and Lidl may be struggling with “over-trading” and the customer shopping experience in stores “is suffering”.
He suggested that some customers may choose to avoid the potential "chaos" at the LADs' smaller shops and instead choose to visit larger stores such as Tesco's where there is "“plenty of space to shop in comfort”.
Rival grocers J Sainsbury and Wm Morrison were trading 2.4% and 1.8% higher on Thursday, respectively.
Top performing sectors so far today
Food & Drug Retailers 2,649.90 +3.97%
Technology Hardware & Equipment 1,162.17 +3.92%
Automobiles & Parts 7,951.76 +3.28%
Oil Equipment, Services & Distribution 16,699.37 +3.12%
Beverages 14,038.36 +2.96%
Bottom performing sectors so far today
Industrial Metals & Mining 1,260.97 -0.64%
Mining 13,591.15 -0.33%
Fixed Line Telecommunications 4,553.35 -0.31%