Tesco Plc's (LSE:TSCO) new full-year guidance was the "important takeaway" from the grocer's third-quarter like-for-like sales, that's according to Deutsche Bank.
The German bank, which retains a 'buy' recommendation, noted that the quarter's sales were below its expectations, reported at 3.1% versus analysts' anticipating 3.9%.
UK-specific like-for-like sales were marked at 3.9%, also below expectations.
Trading over the Christmas period softened further, with group like-for-like growth of 2.4% and UK growth of 3.2%.
The broker noted that the slowdown into Christmas reflected tougher year-on-year comparisons. UK like-for-like growth decelerated by 70 basis points, against a 30 basis point harder comparator. Despite this, Deutsche said Tesco continued to outperform the wider grocery market on both value and volume.
Market share gains were highlighted as a positive. Tesco’s UK value share increased by 30 basis points to 29.5% in December. Deutsche Bank also pointed to improvements in customer satisfaction and Tesco’s relative price position as supportive of underlying performance.
Management upgraded guidance and now expects group adjusted operating profit at the upper end of the 2.9 billion pounds to 3.1 billion pounds range. Consensus currently sits at 3.11 billion pounds.
Deutsche reiterated its 500p target price.