Tesco's turnaround sees it beat Christmas rivals

Tesco posted its best UK Christmas sales for three years yesterday, smashing City expectations and vindicating the £1bn recovery programme initiated last year to turn around its domestic operation.

Its chief executive, Philip Clarke, said: "We are back on form," as the supermarket giant reported the best figures of all the listed grocers, giving him the confidence to appoint Chris Bush as UK managing director and step back from the day-to-day running of its British operation to focus on the group's "vision and strategy".

Mr Bush, a Tesco lifer who was most recently its UK chief operating officer, fills the position vacated by Richard Brasher last March.

Tesco grew its UK underlying sales by 1.8 per cent over the six weeks to 5 January, its best performance since the same period in 2010. This compares with an anaemic 0.9 per cent rise at Sainsbury's over 14 weeks and a dire 2.5 per cent fall in like-for-like sales at Morrisons over Christmas, while Asda will update in February.

However, Tesco benefited from being up against a 2.3 per cent slump over the same period a year ago, which forced it to issue its first profit warning in 20 years in January 2010 and review its strategy.

Mr Clarke then unveiled a £1bn investment in April to turnaround its stuttering UK performance by hiring around 8,000 new staff, revamping its product offer and refurbishing its stores to give them a warmer feel.

Tesco's performance is significant, as the UK accounts for around two-thirds of the group's sales.

But overseas, Mr Clarke said: "The European headwinds continue to hold back growth with no signs of conditions improving in the short term."

Its international business grew total sales by 7.6 per cent over the six weeks, boosted by Thailand driving a better performance in Asia.

In a further reshuffle of its top team, Ken Towle, Tesco's internet retailing director, will become chief executive of Tesco's operation in central Europe.