Tesco has reported its worst Christmas since the last recession in the early 1990s

Tesco has reported its worst Christmas since the last recession in the early 1990s

Supermarket giant Tesco has reported its slowest Christmas period since the early 1990s as the country's biggest retailer felt the pinch of the economic downturn.

Like-for-like UK sales, excluding petrol and new store sales, increased by 2.5 per cent in the seven weeks to 10 January while total group sales rose by 11.6 per cent during the period with the help of overseas growth and increased market share in non-food items.

However, while Tesco's UK like-for-like sales growth was the slowest since the early 1990s, Sainsbury's reported that its "best ever Christmas" with sales up 4.5 per cent last week, Asda and Morrisons also suggested they had had impressive festive figures.

A survey of the UK economy, released on Tuesday by the British Chambers of Commerce (BCC) suggested there had been a "frightening deterioration" in the UK economy towards the end of 2008.

The latest figures come after the supermarket saw UK sales growth of two per cent in the 13 weeks to 22 November.

The firm continues to be more than successful abroad where international sales were up by 32.7 per cent. Sales in Asia were especially strong, up 43per cent, while European sales grew 24 per cent.

Standard and Poor's equity research analyst, James Monro, said:

Group sales increased 11.6 per cent, mainly through international sales expansion which grew by 32.7 per cent, helped by a favourable exchange rate and a strong performance in Asia.

"However, performance was slightly disappointing when compared to the performance of Sainsbury’s, which achieved[increased sales] of 4.5 per cent. Nevertheless, we believe this news is reassuring and retain our view that Tesco is a defensive play in the sector due to its cost saving initiatives, economies of scale and product and price offering."

Meanwhile the supermarket described online sales as "very strong" in the run-up to Christmas, with tesco.com and Tesco Direct seeing total combined sales up 18 per cent at £273m.

"Against the overall background of, I suspect, rising unemployment and economic slowdown it will be a tough year," Finance Director Andrew Higginson told Reuters.

Tesco employs 440,000 people in about 4,000 stores across 14 countries.

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