Tesco has seen its share price fall by almost 6% after like-for-like (LFL) sales increased by 2.9% in the 19 weeks to 3 January.

The supermarket recorded a 3.1% year-on-year increase in group LFL sales in the 13 weeks to 22 November, while this figure jumped by 2.4% in the six weeks to 3 January.

However, its group sales were impacted by a drop in sales in its wholesale business, Booker, which saw reductions of 0.9% and 2.1% in Q3 and the Christmas period respectively. Analysts have noted that this is largely down to a decline in the tobacco market.

Despite this, Tesco’s UK division reached its highest market share for over a decade, as it outperformed the market on both value and volume basis.

Furthermore, its UK online sales increased by 11.2%, including extended Christmas Eve deliveries, while its Whoosh same-day home delivery arm recorded a 47% year-on-year jump in sales.

Chief executive at Tesco, Ken Murphy, said he was "delighted with the strong Christmas" that the supermarket had delivered for its customers.

He added: “Our investments in value, quality and service drove further gains in customer satisfaction and strong growth in fresh food, contributing to our highest UK market share in over a decade.

“In addition to further strengthening our price position, we launched 340 new and improved own-brand Christmas products including 180 in Finest, which once again delivered double-digit sales growth.

"Competition is as intense as ever and we know value remains a priority for customers. We are determined to help customers make their money go further, and earlier this week expanded our Everyday Low Prices commitment to over 3,000 branded products, sitting alongside Aldi Price Match on more than 650 lines and thousands of exclusive offers through Clubcard Prices."

Following the Christmas financial performance, Tesco now expects its full-year operating profit to reach the upper end of its £2.9bn to £3.1bn guidance range, which was issued in October.

It is also anticipating its free cash flow to match its medium-term guidance range of £1.4bn and £1.8bn.

Investment director at AJ Bell, Russ Mould, said that while Tescos's profit is set to match expectations, its festive update "did not pass the smell test" with investors.

He concluded: "These numbers are not a disaster as the company has its highest share of the British grocery market in more than 10 years. A more than doubling in the share price from the 2022 lows means the company will be judged more harshly for the slightest misstep.

"Tesco’s online sales were a positive, including significant growth in its Whoosh delivery services. The economics of web-based groceries improve with scale so the company will hope these trends continue.

"The recent strong Christmas trading by the discount names Aldi and Lidl shows competition is intense, even if Tesco is well placed among the established supermarkets to fight back."

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