London - Sales at Tesco surged in the third quarter as Britain's biggest retailer beat forecasts and sent its share to a life high with news it was taking market share in non-food items such as clothing and electricals.
Group sales for the 14 weeks to November 20 rose 12.2 percent, beating most analysts' forecasts, which had pitched the increase in a 10 percent to 11 percent range.
Total sales in the UK, where Tesco reaps 80 percent of its revenue and accounts for 1 in 8 pounds of retail spending, rose 12.3 percent, an increase in tempo from the second quarter gain of 11.8 percent and well above the market average.
"The Tesco figures are phenomenal. The market never gives it the credit it's due," said David Buik of Cantor Index.
Tesco shares, which have outperformed the London benchmark FTSE 100 index by 10 percent this year, pushed up 4.87 percent to an intraday record high of 3.125 pounds (R34.80) yesterday before retreating.
Like-for-like sales at the company's UK stores rose 9.8 percent, or 7.5 percent excluding petrol sales, which the company said had gained from price cutting.
International sales, mainly in eastern Europe and Asia, grew 18.2 percent at constant exchange rates. But the weakness of Asian currencies versus sterling took its toll, and at actual exchange rates sales grew 11.9 percent.
"Tesco hasn't seen sales growth like that in 10 years," said one London-based analyst. "Tesco are underplaying it in public relations terms they are running away from everyone else just now."
The company said it expected new space in the international operation to contribute more to sales growth in the fourth quarter as it began trading from an additional 130 000 m2 of floor space.
Tesco said it had continued to take market share in non-food categories in the UK as it geared up for the all-important Christmas retail season. At the half-year stage it said it had a 6.5 percent share of all UK non-food sales.
Low-priced electricals like kitchen and photography equipment were expected to be particularly successful over the holiday season, a spokesperson said, as Tesco takes on major UK electricals players like Dixons and Kesa.
"For example there's been a huge move towards digital cameras. We're expecting to sell something like 40 000 over Christmas," he said.
In September, Tesco announced a 24 percent rise in underlying pretax profit for the year as booming sales of clothing, DVDs and stationery helped further its meteoric rise and as its peers feel the pinch.
"Well, as our US friends get stuck into their turkey for Thanksgiving, the retailing 'turkeys' in the UK high street are still being roasted alive by the mighty Tesco," said Nick Bubb of Evolution Securities.
The company, which overtook Sainsbury to become market leader in 1995, is expected to chalk up pretax profit for the current financial year of 2.06 billion pounds, according to Reuters Estimates.