Sector movers: Tesco boosts retail sector ahead of Q3 update

4th Dec 2012 14:42

Tesco was on investors' shopping lists this afternoon ahead of its trading update tomorrow, lifting the food and drug retail sector higher.The supermarket titan is to update the market on third-quarter trading on Wednesday morning. Shares were making gains after Jefferies said that the grocer is "gaining traction ahead of Xmas".Figures from Kantar Worldpanel revealed weak industry demand last month, with sales for the 'Big 4' (Tesco, Morrison, Sainsbury and ASDA) up just 1.5% year-on-year in the four weeks to November 25th. Jefferies said that the most likely explanation is a delay in gifting expenditure with food sales picking up the slack from non-food sales."This pattern of performance was similar in 2011 (when slow spend in the build-up to Christmas was then made up for by strong spend in the days immediately preceding the festivities)," the broker said.As for Tesco, Jefferies said that the UK market leader has outgrown its major peers by 200 basis points ("the biggest rate of outperformance recorded in any four-week period for six years") and improvements in execution are starting to pay off."Tesco is approaching Christmas with the strongest trading momentum of the Big 4, and this seems to be hurting Sainsbury. Morrisons trading form remains poor, whilst ASDA is slowing in a controlled manner."Last week, Nomura released a research report on Tesco, saying that it forecasts third-quarter like-for-like (LFL) sales excluding VAT and fuel to come in 0.9% lower than last year, a reversal from the 0.1% growth reported in the second quarter.Nevertheless, shares were up 1.35% at 326.8p in afternoon trade while Sainsbury gained 0.24% to 337.5p. Morrison was down 1.05% at 263.4p.Top performing sectors so far todayIndustrial Transportation 2,365.99 +1.56%Tobacco 37,870.08 +0.85%Food & Drug Retailers 4,045.45 +0.76%Health Care Equipment & Services 3,778.88 +0.74%Gas, Water & Multiutilities 5,267.58 +0.70%Bottom performing sectors so far todayChemicals 8,782.52 -1.23%Technology Hardware & Equipment 929.76 -0.87%Mobile Telecommunications 3,727.80 -0.83%Oil & Gas Producers 7,631.87 -0.55%Software & Computer Services 936.74 -0.49%