Sector movers: Grocery stocks rise as Kantar data shows improving trends

Kantar Worldpanel grocery-market data showing Tesco's best sales performance since June helped fragile sentiment in the battered supermarket industry to improve slightly on Tuesday.

Shares of the three listed UK supermarket chains, Tesco, J Sainsbury and Wm Morrison, were all on the rise in afternoon trade, with the sector among the best performers in London.

Kantar figures showed that the grocery market expanded by 0.4% in the 12 weeks to 12 October, compared with a year ago, even though like-for-like prices declined by 0.2%.

This was the first time the market was in deflation since Kantar's recorded data began in October 2006 as the top-tier grocers continued to cut prices amid heightened competition from the so-called 'discounters'.

Tesco, the biggest UK retailer, saw its market share decline to 28.8% from 30.1% a year earlier and "is yet to see substantial improvement", according to Kantar's consumer insight consultant Fraser McKevitt.

"However it seems it may be turning a corner as sales are down 3.6%, which is the grocer’s best figure posted since June," he said, adding that trends at the grocer were "in the right direction".

Tesco shares were up 3.1% at 184.78p by 14:24. The data came as welcome relief to investors of the retail giant, whose share price has been hammered over recent months by a string of profit warnings, accounting irregularities and several senior-management changes.

Shares in Sainsbury and Morrisons were up 3% and 1.8% respectively on Tuesday.

High-growth rivals Aldi and Lidl continued to build on their shares of the market, rising to 4.8% and 3.5% respectively.

Even so, McKevitt said: "Watching the numbers very closely, you could say that Aldi and Lidl have peaked - it's been the fifth month in a row their combined growth rate has declined."

Nevertheless, growing sales by a combined 23% year-on-year, the companies are still clearly outperforming the market and "that won't provide much comfort to their competitors", he said.

Top performing sectors so far today

Automobiles & Parts 7,264.37 +2.88%
General Retailers 2,615.90 +2.32%
Industrial Engineering 9,222.26 +2.27%
Oil Equipment, Services & Distribution 21,011.91 +1.96%
Food & Drug Retailers 2,605.88 +1.94%

Bottom performing sectors so far today
Technology Hardware & Equipment 997.48 -4.36%
Household Goods & Home Construction 11,676.38 -0.62%
Tobacco 38,663.38 -0.61%
Pharmaceuticals & Biotechnology 11,746.22 -0.02%