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Analysts expect Tesco to have been best of the 'Big Four' over Christmas

Admittedly, the bar hasn't been set too high but the consensus among City number crunchers is that Tesco should have performed better than its rivals over Christmas
tesco aisle
Aldi and Lidl are proving to be a persistent thorn in the sides of Britain's biggest grocers

Tesco PLC (LON:TSCO) shareholders are in a bit of a limbo as they wait for the grocery giant’s Christmas trading update on Thursday morning.

Investors haven’t heard from Dave Lewis and co for a few months and they’ve got a bit twitchy as a result: shares are down more than 10% since October’s half-year results were published.

READ: Morrisons warns of 'change in consumer behaviour'

Analysts reckon the UK’s largest food retailer has the potential to surprise the market, but Wm Morrison Supermarkets PLC (LON:MRW) and J Sainsbury PLC’s (LON:SBRY) results haven’t filled the market with confidence.

Sainsbury’s indirectly pointed the finger at Aldi and Lidl for its Christmas sales slump, while Morrisons warned of a “change in consumer behaviour”, claiming that shoppers are seeking out bargains like never before.

Analysts always thought the German discounters would boost their market share over the holidays as cash-strapped consumers tighten their purse strings and Tesco is widely expected to acknowledge their growing threat on Thursday.

READ: Sainsbury's blames intense competition as Christmas sales fall

But the City still thinks the FTSE 100 group could surprise on the upside with its numbers. At the least, they expect Tesco to be the top performer out of the ‘Big Four’, with sales growth of 1.5%.

“Whilst the overall market has slowed, we remain sanguine on progress in Tesco's core UK business – the competitive offer is as sharp as it's been in years and mix benefits (supplier PL rationalisation; Finest*; General Merchandise streamlining) should drive margin rebuild,” said UBS in a note.

The investment bank added: “We think Christmas could deliver a positive UK like-for-like surprise vs. market expectations.”

Tesco shares were up 1.9% on Wednesday afternoon to 212p.

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