Tesco and Sainsbury’s will reveal whether it was a merry Christmas across their supermarket operations in festive trading updates next week, while Next and Marks & Spencer also report back from the high street.
The UK’s two biggest grocery chains have been battling it out to win over shoppers with their Christmas advertising campaigns and beat off ever-increasing competition from discounters Aldi and Lidl.
Figures from Tesco on Thursday will show how it fared in the so-called golden quarter, having hiked its earnings guidance in October to between £2.9 billion and £3.1 billion.
Christmas trading will be crucial to Tesco meeting guidance, and chief executive Ken Murphy has warned the industry remains “incredibly competitive” amid a price war in the sector.
AJ Bell experts said: “As is the case with many retailers, Tesco’s shares have lost a little momentum since November, and the run-up to the Budget from Chancellor Rachel Reeves.
“However, they are still up by a fifth in the past year and stand very close to levels last seen in 2010.”
The chain has increased its share of the market to 28.3% in recent weeks, according to Worldpanel, and is looking to beat sales growth of 3.7% seen in the previous six-week Christmas period.
Sainsbury’s figures on Friday also come after it recently increased its earnings outlook, saying it is now set for retail earnings of more than £1 billion after a better-than-expected half-year performance.
The group, which also owns the Argos chain, last year saw grocery sales rise 4.1% in the quarter to January, but more disappointing trading in Argos held overall growth back, with sales across the business up 2.7%.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “The ongoing cost-cutting programme is helping to offset higher employment costs, and savings are also being reinvested in keeping food prices down.
“That should have helped lure in more customers in the run-up to Christmas, a period where shopping trollies get piled higher than usual.”
Outside of the supermarket sector, retail titans Next and M&S will give their verdict on Christmas trading on Tuesday and Thursday respectively.
Next is expected to cap another solid year of trading, having recently upped its guidance once again, saying it expects sales over the festive quarter to be significantly higher than previously predicted.
The fashion and homewares chain said at the end of October it expects full price sales to grow by around 7% in the quarter to January, increasing its guidance from 4.5%.
However, it has repeatedly cautioned over the consumer backdrop and will be watched closely for further comments on how consumer spending is holding up.
Fellow retail bellwether M&S will be hoping for a solid festive performance to help “draw a line under what has been a tough 2025”, according to Mr Chiekrie.
A cyber attack in April hit online sales hard after M&S was forced to suspend all website sales for six weeks, leading to a plunge in first half profits.
With a lingering but smaller impact of the hack in the second half, it will be looking for this to be offset by strong demand for its festive food and fashion ranges.
“The worst looks to be behind M&S now, but the group has some work to do to rebuild investors’ confidence,” said Mr Chiekrie.
Sales figures from Greggs, also on Thursday, will be examined for signs of better trading after slowing sales growth in recent months and a profit warning in July.
The group was impacted by warmer weather in the summer, but has also flagged tough market conditions and weak consumer confidence.
