Tensions between two of Britain’s biggest supermarket chains have burst into the open after an executive at Sainsbury’s urged City analysts to question market-leading Christmas sale figures produced by rival Tesco.
In an email sent to food retail analysts, a copy of which has been sent to Sky News, a senior member of Sainsbury’s investor relations team accused Tesco of being “a bit disingenuous” when it reported UK like-for-like sales growth for the six weeks to January 5 of 1.8%.
The allegation referred to the fact that Tesco’s headline sales number was based on an accounting rule that allows it to include sales where customers have used Clubcard vouchers.
“I thought it worth pointing out that the UK [like-for-like] number of 1.8pc that Tesco are reporting this morning is non-IFRIC compliant,” the email said. “This is a bit disingenuous, they should be using the 1.4pc number in their headline. All of our reported numbers are IFRIC compliant, as they have to be under IAS18!”
Sainsbury’s on Wednesday reported like-for-like sales growth over a longer period of 0.9 per cent. Sources said that if it had used the same accounting benchmark as Tesco and included sales using points under its Nectar loyalty scheme, its growth figure would have been 1.4%.
Tesco insiders said that Sainsbury’s was attempting to “smear” its Christmas trading performance.
Philip Clarke, Tesco chief executive, declined to comment on the performance of its competitors, saying that he was focused on “building a better Tesco”.
The row underlines the heightened sensitivity within Britain’s biggest food retailers about their performance in a lacklustre UK economy.
It also highlights the difficulty of relying on a measurement such as like-for-like sales, which gives little clue about the profitability of a business during a given period. The numbers announced by Tesco covered 42 trading days, while Sainsbury’s statement covered 98 days, further pointing to the danger of relying on comparisons which can be misleading.
The respective Christmas trading statements of Sainsbury’s and Tesco contained few surprises. Analysts had expected Tesco to rebound from a dire festive period in 2011-12, when it had to issue its first profit warning for decades, while Sainsbury’s has seen like-for-like sales grow for 32 consecutive quarters under the leadership of Justin King, its chief executive.
So far, Marks & Spencer, which saw clothing sales fall by nearly 4% over Christmas, and Wm Morrison, the supermarket group, have been the biggest losers from a tough Christmas. At the other end of the spectrum, Next and John Lewis Partnership registered a performance that was well-received by investors.
It is far from unusual for companies to raise questions about the performance of their competitors with City analysts, although it is less common for those suggestions to find their way into the public domain.
Tesco and Sainsbury’s both declined to comment further.