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Tesco PLC
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Hello, and welcome to the Tesco Third Quarter and Christmas Trading Update Call. [Operator Instructions] Just to remind you, this call is being recorded. And today, I am pleased to present both Dave Lewis, group CEO; and Alan Stewart, CFO. Please go ahead.
Thank you. Good morning, everybody, and a Happy New Year to you all. Thank you for joining us. And as usual, Alan, our CFO, is on the call with me too. Now I know it's a very busy morning for everybody, so I'll get straight to today's announcement. I am very pleased to say it's another very strong performance, a strong third quarter and a record Christmas in the U.K. And the U.K. sales grew by 2.3% for the third quarter, and we outperformed the market in both like-for-like sales and volumes. Earlier in the year, we took a strategic decision to hold back on inflation, passing through less to our customers than our peers. That set us up really well for the third quarter, and we outperformed as a result. That momentum accelerated again, with a record 4 weeks leading up to the 25th of December. In either the Christmas week itself or if you take the full 7 trading days before Christmas, we sold more than ever before in our food offer, as we made our offer the most competitive it's been for many, many years.Now that's exactly where we want to be. And it's worth remembering that this is our third consecutive Christmas of growth, with its total U.K. 3-year like-for-like of 4% and a 5.6% like-for-like growth for our core food business. I spent a lot of time in stores across the country in the buildup to Christmas, and the quality of our execution was the best I've seen. The planning and preparations were spot on and the business was humming. It was a real pleasure to see and to be a part of. If you were tracking the sentiment on social media, you could see the positive reaction from our customers too. The key driver of our performance remains food and particularly fresh food. Through the Christmas period, our food sales grew by 3.4% and fresh by 3.7%. In that key Christmas week, we significantly outperformed the market in fresh, with a full 4% lead in the IRI market data. Over the 19 weeks, food was up 3.2%, and fresh was up 3.6%. If I come back to the really strong Christmas performance, let me give you a little bit of a color of what was driving that. We sold over 600,000 fresh whole turkeys, which was up 13% year-on-year. Lamb was up 15%, and salmon -- fresh salmon from our fish counter grew by more than 23%, which, if you put it in weight terms, means that we sold just over 0.5 million kilos of fresh salmon in that Christmas period. Our party food grew by 7%. And in the fourth year of our Festive 5 offer, which this year sold over 20,000 tons, vegetables were up 5%. Away from food, F&F clothing was up 5%. And the new brands, Go Cook and Fox & Ivy, drove 6% growth in own brand homeware. We continue to selectively max the mix in areas like vision, home computing and entertainment, and that creates a drag from GM in total of 0.6% over the 6-week period. From a brand perspective, Tesco Finest was up 4%, and Tesco FreeFrom had a strong performance, with Christmas lines up 24%. Importantly, the growth came across every one of our formats and channels. The positive momentum we saw in our large stores over the last -- the first half of the year has remained, with sales from our Extra stores, excluding GHS, growing 2% over Christmas.And online, we have a record Christmas period, with over 4 million grocery orders. Total sales were up 5%. In the key Christmas week, we made 770,000 deliveries, and our colleagues picked more than 45 million items. So I'm really pleased with the way that we delivered in the months leading up to Christmas and, in particular, in those last 4 weeks running up to Christmas Day. Now at the same time, as we were achieving these record volumes, we were also having to manage a substantial and complex challenge from integrating the volumes previously supplied by Palmer & Harvey. Following the announcement of Palmer & Harvey's administration on the 28th of November, we had to change our plans to incorporate an extra 5,000 deliveries of nearly 900,000 cases to stores each week, including, for example, the virtual rebuilding of our tobacco supply chain, all of which put a strain on our distribution system during our most busy period. These challenges are resolved now, but they did take some of the shine off an otherwise outstanding performance. Lost tobacco sales impacted our total like-for-like number by around 0.5% for the 6-week period. Looking outside the U.K, in Ireland, sales grew by 3.5% over the 19 weeks, as customers responded well to the fresh food offer. The work the team has done to strengthen our offer in Ireland has really moved the business forward and we're growing volume, transactions, basket size and market share. In Central Europe, we continue to turn around our business, with like-for-like sales up 0.6% over 19 weeks and the operational performance in countries was really very good. Importantly, we saw an improved position in Poland. In Asia, we continued to see the impact of our decision to step back from bulk selling activities in Thailand, with sales down 11.1% over the 19 weeks. We've also withdrawn from other couponing and promotional activity, which, in addition to the market deflation, has impacted the top line growth. It's absolutely the right thing to do, and we'll finish the job in the fourth quarter. Outside of the retail business, bank revenue grew by 4.8% across the 19 weeks, with strong growth in the number of savings accounts and in the number of new mortgage customers, in line with our strategy of increasing the proportion of secured lending. So those are some of the highlights of our performance over the last 19 weeks. But I would like to spend a few moments now looking ahead. Clearly, we'll save the full update until April, but just to say we're confident in the outlook for the full year, and we are firmly on track to deliver the medium-term ambitions that we set out 15 months ago. On Booker, we are pleased to get the unconditional clearance from the CMA last month. And as we said before, we expect to hold shareholder meetings towards the end of February, with completion in early March. So a very good performance over the last 19 weeks. The long-term build in momentum of our business continues, and I'm really pleased with the progress that we're making.As a final word, I'd just like to thank all Tesco colleagues and our supply partners for their commitment and their effort during this very, very busy period, it really is much appreciated. So thank you for listening, and I'll now hand back to Hugh for your questions.
[Operator Instructions] Our first question is to the line of Bruno Monteyne at Bernstein.
Dave, Alan, three questions from me, please. At the half year results, you made it clear that you kept the pricing, the inflation from getting through to customers in the first half, trying to protect them from the Brexit inflation. Am I right in understanding that in the second half, you let it come through, and therefore, that will have impacted your pricing position versus the market as it's finally came through? The second one, how would you estimate the impact on profits from the tobacco supply issues, as a positive or a negative? And the third question is, you talked about in quarter 4 the impacts in Asia, Thailand namely, will end. Does that mean from quarter 1 next year, you should -- you're expecting to be back into positive growth in Thailand?
Bruno, thank you for the 3 questions. So in terms of inflation, you're absolutely right in what you talked about in the first half year. We -- and if you look -- importantly, the way that we look at it, Bruno, is if you look through the whole period of last year and the year-to-date, the level of inflation in Tesco is lower than our peers, and therefore, we've sharpened our price position relative to the marketplace. There has been some inflation in terms of point. But if I look at it in total and the way that I would measure that is, if I looked at our price relativity in the month of December, I was really happy with our price relativity versus the market, and we saw that in our volumes, and we saw that in the food performance. So there has been some -- you look at point inflation and people can make one conclusion. But you really should look at total inflation and what the actual price relativity is at a point in time, and I was really happy with where we were at Christmas. In terms of your second question, look, tobacco is very valuable. It has a big impact on the sales line. It is actually really quite low when it gets to -- in fact, very, very small when it comes to the profit line. So no impact in terms of profit. It's clear -- we took some of the complexity into our distribution system, and that would have cost us -- that will cost us a little more, but nothing at all, Bruno, that would make us change our view about the outlook for the year, but just to recognize that we have taken that sort of separate operation. And in terms of Asia, you are right, we set about a program of maxing the mix and getting away from unprofitable sales. And I am happy with the way that, that's progressing. It is also a little bit in Thailand, I think market deflation was 3% in the period as well. So if you look on the line, still about the same level we thought it would be, but there's some market movements. And yes, we gave ourselves a year to walk through that, and so when we get into March, I'll be looking for Tony and the team to show us there a return to growth.
The next question is over the line of Andrew Gwynn at Exane.
Can you just talk a little bit more about maxing the mix within the nonfood? I think I heard 0.6 percentage point drag on the overall like-for-like. So just wondering what's happening within the category. And the second was just on the consensus. Could you just confirm where you see consensus at the moment? I'm not sure if you've done an exercise very, very recently. And then the final one is just on -- as we run over Q3, there was a lot of promotion within the market, but also specifically from Tesco. I mean one of your peers called it chasing unprofitable sales, so particularly around the fuel promotions. So what was the logic in that? And would we expect repeats going forward?
Okay. First, so look, Andrew, the -- I think we've talked about maxing the mix in Capital Markets Day, sort of October, what, 15 months ago now. And you've seen from us periods outside of Christmas what it is that we've been doing to manage a more profitable mix within general merchandising, and we've carried on with that. So in home, you've seen launch of exclusive brands Fox & Ivy, Go Cook, really fantastic customer reaction to them, growing at 6%. Clothing continues to grow and do very nicely at 5%. But we were selective in those categories and how we participated. So in home computing and in entertainment, we were less active. But that's the continuation of what it is we've been doing now for the last 2 years in terms of managing the mix of the products that we sell. To your second question, obviously, we are in an offer period, so we don't run -- I can't comment on a consensus exercise, but we remain very confident in the outlook that we talked about at the half year, and so really nothing new to say there. Bang on track with everything that we've been talking about before. Your comment on promotions is really interesting because, actually, if I look at the number of promotions in Tesco, in Q3, our number of promotions were down 4.7% year-on-year. And our number of promotions in -- at Christmas time were flat year-on-year. So actually, if you look in the 19 weeks that we're talking about, we're talking about less promotions in Tesco, not more, so I'm not sure where that comment from competitors may have come. Yes, we put a petrol promotion in there, it wasn't particularly aggressive, it was around GBP 60 of shopping. It worked very well for us, so really very happy with that, but that's about a little help for something that's important to the customers. But total promotional activity in Tesco over the 19 weeks was down year-on-year. I don't have the number yet for Christmas, but 4.7% in Q3 gives you some idea of the trajectory towards lower, simpler, more stable prices.
Okay. Yes, I think it was specifically the fuel promotion that was referenced. Just one very quick follow-up. Just on Asia, the wholesale track still around about 6 percentage points, and now, obviously, we've got the deflation and the promotion change as well within that. Is that -- just to confirm?
No, I think the whole --- the bulk drag that we talked at the time about being more like 8% -- 8%, 8.5%, and then you've got the 3% of market deflation that we talked about. [indiscernible] so that's what the composition of that looks like.
We are now over the line of David McCarthy at HSBC.
A few questions. First question is, can you talk about your distribution? Was that under strain at Christmas, was there any issues there? Are you confident in that you've got the infrastructure right to continue growth? Secondly, I wanted to ask about tobacco and Palmer & Harvey, because I'm a little bit surprised at the impact of 50 basis points, because it was kind of an open secret that Palmer & Harvey was going to fail, and yet, you seem to have been caught a little bit surprised by that. And then thirdly, yes, this is a call on trading, but you've talked about margins, so you've opened the door to this question. And that's that -- 15 months ago, and by the time you talk in April, we'll be halfway through towards that date of which will only be 2 years away of 3.5% to 4% margin, are you going to narrow that range as you zero in on it? I can understand a wider range when you've got 3, 4 years to go, but as you go into 2 years and 1 year, are you going to be saying that, that range is going to be, I don't know, 3.6% to 3.8% or 3.7% to 4%? Are you going to bring that range in at any point?
Thank you, David. Look, on distribution, David, what we were -- so no, I'm very comfortable with the capability of the distribution infrastructure. The fact that we were able to take in that sort of level of complexity and volume at our busiest period, I think, shows the capability that's there. But it was -- David, it was complicated. And we were very happy with Palmer & Harvey as a partner, to take that part of our distribution, so it was something that we would have preferred to continue in the way that it was. We brought it in. We obviously had contingency plans. We were under the impression, I think as everybody was, that it wasn't an event that was going to happen before Christmas, but unfortunately, it did. But by far and away the most significant there, David, as you touched on in your second question, is tobacco. And it wasn't just about supply chain, it was about being able to access the buying of tobacco from suppliers who were supplying Palmer & Harvey, that they couldn't and they needed to supply ourselves, so there was a really big ramp-up. As you know, our tobacco market share is a little bit more than 30%, and so building that pipeline again did take time, and that's why you see the impact that you do. But we did have [indiscernible] availabilities on tobacco through that trading period. And in some places, they weren't insignificant tobacco availability issues. We now have that firmly established in our own network. It has to be a secure segregated supply chain, as I'm sure you appreciate. So it is quite complicated for what it is. And we had a contingency plan, but would we have chosen to be assimilating all of this in Christmas period? Normal project planning, you wouldn't have done it in a Christmas period. But we had to and we did, and the teams worked fantastically. But as you know, we were by far and away the largest customer of Palmer & Harvey, so we felt that impact more. Now to your final question, I haven't given any thought, David, apart from look we -- I'm really comfortable and confident in the range that we've got, 3.5%, 4%. I'll take away your suggestion and reflect on it, as we get towards April. But I hadn't thought -- I thought you'd at least give me 3.5% to 4% for the period. But let me reflect on what you say, because if we can be helpful, we'll try to be. But at the moment, 3.5% to 4% and still really firmly on track and very happy with that guidance.
We are now over to the line of Xavier Le Mené at Bank of America Merrill Lynch.
Quick one actually for me. Can you just quantify the inflation you had in Q3 as well as Christmas and also give us a bit more insight on the volumes, so what volumes are we taking on? You had [ 0.3%, ] if I'm right, for H1. So what kind of volume growth you had for Q3 and Christmas?
So Xavier, what we saw is there is a level of market inflation out there which has been plus or minus 3% for most of the period. And depending on where the competition has been, that we're either ahead or below that. Rather than talking about individual points, as I said on an earlier question, I look at the totality of it. And the inflation that we've seen in Tesco is below the average for the market and below the average for the peers, and therefore, the price competitiveness that we stand at now, and so that's through the Christmas period versus the market, really very happy with. In terms of volume, the critical metric for us is market outperformance, and we continue to outperform the market. It's fair to say that as inflation came through market, did macro volume become harder in total. It did a little bit. The critical thing for us at Tesco is -- in whatever those prevailing conditions are, are we outperforming the market in volume, and we continued to do that really very strongly through Q3 and in Christmas, and I gave the specific for the 7 days before Christmas. IRI had our food outperformance versus the market at 4%, which is a show of the strength relative to our peers.
We are now over to the line of Niamh McSherry at Deutsche Bank.
So two questions from me. The first one is on the drag -- 0.5% drag from tobacco sales. Can I just confirm that, that is tobacco value sales? And I was wondering if perhaps beyond that, you think there was an impact on your footfall because of the tobacco issues. And then secondly, on the general merchandise drag, is there -- I mean how long should we expect that to last, another year, another 2 years? I'm just wondering whether you have an idea of where you'd like your general merchandise kind of sales mix to be, and hence then, how we should expect that to develop going forward. And then actually, I do have one more. And could you comment perhaps on trading since Christmas, so January trading across your regions?
A shorter trading update. So yes, I can confirm that the 0.5% on tobacco is value sales. No, we didn't see any impact in footfall. But you give me the opportunity to say, so I know people are talking about Christmas week and also some claims around records. And obviously, Christmas fell on a particular time. So what we did, we look not just at the Christmas week. If I look at any 7 days of trading leading up to Christmas Day, in Tesco's history, we never sold more food than we did this Christmas. So as an indication, we didn't see any impact in footfall, we saw a very, very, very strong lead-up into Christmas. Tobacco was a problem, but we didn't see that impact in the rest of our offer. But we did lose that top line sales that I've mentioned before. Look, when you talk about GM, it's not really about how long. We talked about a journey which was max the mix to 3.5%, 4% by '19, '20. We continue to work on that trajectory. Do we have an idea, I think, was your question. We have more than an idea. We have a very specific plan, and we have a very specific trading point of how we get from where we are to where we want to be. You'd understand, for competitive reasons, that I'm not going to give any insight to that until actually we've made the changes. But I'm really very happy with the way we're thinking about macro space in the store and how it is we're thinking about getting the returns from the space that we have through the mix that we put in there. And so absolutely on track with how we're planning to max the mix to 3.5%, 4%. Look, we've updated trading up to '19 -- for the last 19 weeks. The 2 weeks after Christmas, they are 2 of the smallest weeks of the calendar year, so there's nothing really for me to update. I think now if I get into giving weekly updates on trading, I'll spend all my time on the phone. But no, over the 6-week period, really very happy with the way that the Tesco business played into the market.
We are now over to the line of Sreedhar Mahamkali at Macquarie.
Dave and Alan, 2 questions then please. Specifically, when was the tobacco issue totally resolved? I realize it's never really kind of total, but when was the total supply resumed I suppose is what I'm trying to understand. And if it's not literally the last few days, what was the trend since then in terms of your tobacco sales, one? And two, just given it seems clearly like a headline miss in the U.K., Asia was a bit worse. Europe Christmas trading wasn't really as good as Q3 despite the soft comp. Why are you confident in your profit outlook, please? Is there anything you can give? I realize again it's a trading statement, but I dared to ask the question. It will be helpful if you could flesh out your thoughts.
Okay. Look, Sreedhar, if I -- let's talk about tobacco. So look, the issue became really live immediately after the 28th of November, and that's why I gave the date for it. So the problem was all the way through the 6-week trading period that we're talking about. And it comes all the way up to the very last few days. We continued to require more volume of tobacco than our suppliers have been able to give us. It's been their year-end as well. And if you know in the tobacco industry, they work to certain quotas of volume, so to rebuild the supply chain the size of Tesco's is not insignificant. So we really have been up to the last few days in terms of accessing all of the volume that we needed for the supply chain. In terms of the resolution that I talked about was the incorporation of the system into our Dagenham DC is now done, complete and behind us. So now it's all about just making sure that we completely top up the pipeline and get the availability back to the 99% that we would want in this category.
Where is availability now then, please? Again, if you don't have to hand, I understand.
No, look, I do. So we're talking -- and I don't mind. We're talking about in the low 90s percent, so I was looking at it yesterday, we're talking around tobacco availability, be really clear, in the low 90s. And that's all about, actually, just rebuilding, as, literally, stock flows through now. But if you want a very precise point, that's where we sit on that trajectory. The -- to your question around performance more generally, Sreedhar, look, actually, I look at the U.K. performance, and people may or may not have understand that, I completely get it, around tobacco. It's not a category that we talk about much. I think the 2 things that are important to remember is it's very significant at the top line because of the price of the products. It's very, very, very small when we think about profitability. So whilst it's a miss in terms of sales like-for-like, its impact on profit is really very, very small, and so that's why if I look at the mix and how we ran Christmas in the U.K. and Ireland, really very happy with the way that we ran the proposition for customers in both of those countries and saw a strong performance. And that's why when I come to -- within the restrictions of what I can say, just saying we're very happy and confident with the outlook that's out there. Central Europe, the turnaround trajectory is as we wanted. We continue to perform well in Czech and Slovak. Poland starts to become positive in terms of like-for-like, and we stay market leader in Hungary. So the -- keeping that business competitive or getting it competitive and improving the profitability has been what we started to do. We showed it in the first half year, and we carry on with that trajectory. And in Asia, we were, I think, very, very clear about the fact that we were going to walk away from bulk selling. It would take us a year. We continue to do that, and you saw the margin improvement in the first half of the year, and that's a direct result of changing the mix in the business. So if you sit in my seat and you look at the [ 3 parts of ] the business, and you say actually, it's playing out by and large pretty much where we wanted it to be. The difference is the complexity and the volumes came through is from Palmer & Harvey, and we had to accommodate that in the U.K. in a busy -- in a record December for Tesco. So that's where we are.
So can I just add one quick follow-up? In terms of Thailand, have you seen any kind of underlying improvement in consumer post the royal cremation? I know that was talked about in the past that we should start to see the consumer coming back. Beyond the bulk selling and the promotional changes in strategies you're making, do you -- have you got an underlying feel?
The -- so the feel that I've got is the following. If I -- the way that I look at it is I look at the market share within Thailand, and we continue to hold our market share in Thailand, as we go through the change in the mix. So that tells me I'm still competitive for customers in Thailand. I think that the notable thing in Thailand is not so much about trend, is that I think as the market -- it's come through a year of being really quite soft as a market relative to historical averages, and we've seen deflation in the Thai market. And so over the Christmas period, deflation in Thailand was running at 3%. And so that's the new feature that we've seen in Thailand. It's not really about buying behavior post the king's cremation. But we'll -- I think we will continue to track that. We haven't seen anything now that I could talk to you about, Sreedhar. And we'll walk through Chinese New Year as well and see how that plays out. But there's nothing in consumer behavior. It's much more -- 6 weeks is really quite a tiny period to be thinking through, and obviously, Christmas is not the event in Thailand that it is in the rest of our business.
We now go to the line of James Tracey at Redburn Partners.
Dave, James Tracey here from Redburn. Three questions from me. The first one is, could you please confirm your guidance of space growth in Asia? I think your guidance at the half year results was down 0.3% year-on-year for the full year. Second question is, can you please tell us what general merchandise is as a percentage of U.K. sales ex fuel? And the final question is, on inflation, I've seen some comments on the wire saying that the Brexit-related increase in prices is pretty much through the system and inflation should be lower next year. Clearly, with inflation at around 3% in the second half, it's been a big driver of growth. What sort of level do you think it will fall to? Are we talking to sort of 0, negative, plus 2%? Can you help us out with that?
Okay. All right, James, so look, in terms of space growth in Asia, no change to what we said before. I can go -- I'll go and check. I have to say I don't have that in the top of my head, but there's nothing that's changed since we talked at the half year, so no problem. General merchandising in our business is just under 10%. So that's the sort of scale I can give you. In terms of, look, inflation, I don't think anybody can say that Brexit is behind us, because Brexit is still in front of us. So depending on how Brexit works, we will see what the impact is. And like everybody, we play with different scenarios. I think we've never ever given a guidance on what we think inflation is going to be. We know we're very clear, we want it to be 0. We don't welcome it. We'll continue to do everything we can to offset it. I think what we've said and what I think others have said is, if you look at the short-term pressures of cost inflation, they appear to be lower at this moment than they were at a similar period last year. And that, I think, is why people are talking about headline inflation being lower in '18 than it was in '17. We would agree with that, given what I can see in terms of forward cost, but we start from a place which is we want to mitigate as much as we possibly can for our customers, and that's all I'll say on inflation.
[indiscernible] to the line of Robert Joyce at Goldman Sachs.
A couple from me, both linked. I guess the first one is just on -- external data suggests October, November, running into Christmas, you were pretty much significantly outperforming the Big Four peers. Whereas that seems to have slowed in December, with maybe Morrisons and it looks like Asda doing better in the month of December than you guys. Can you point to what may have driven that sort of reversal in fortunes over the period? Anything you think is more structural there? And just linked to that, have we seen a fairly consistent level of competition in the market over December? And more interestingly -- more recently in January, with some recent pricing announcements from competitors, just wondering now if you could talk to the competitive dynamic.
Okay. Rob, so I don't see -- I'll be short in my answers, I'm getting the speed up message from the guys here. Look, absolutely nothing structural. We look at the long term performance and the market outperformance that you talk about over the period, I think both on Kantar, Nielsen and others, you've seen it as well. I think when you look at December, I suppose the perspective that I have is I look at the performance on core food versus the market and I still see us outperforming in December. So the 4 weeks was record for us. The 1 week was record for us. The IRI outperformance was significant in food in that period. So anything changed in terms of structure of food performance during that period? No. There's been an impact on numbers based on tobacco, but we've touched on that a number of times. So no, I don't see anything structural. I think the other thing, Rob, to fill it out a little bit, is I think we -- you got to look -- and that's why I mentioned, we're talking about now 3 years of growth, that's not necessarily the case for everyone. And therefore, year-on-year comparisons, obviously, have 2 elements to them, but no, I've not seen anything that I would consider to be structural. I've seen some strong promotional activity, but I would expect that. But as I said earlier, our promotional activity is actually down year-on-year.
Very quickly on that. Sorry, just to -- sorry to interrupt. I mean, obviously, fresh food has been very strong, it's a key category. But I guess the corollary is the center store or the categories you look to be ceding share to other grocers. Is that something we should expect from the strategy going forward? Is that likely to be a bit of a drag? Or is that a December sort of promotional one-off, do you think?
I think, Rob, what you have to do is make sure that you're comparing and looking at the seasonality of actually where the shop happens across the whole offer. So no, it's not about ceding share in the way that you say. I was really very happy with center of store, so that's Fresh Food, that's food more broadly, and that's why I give you both numbers. 3.4% on food for the Christmas period and 3.6% over the 19 weeks is really strong performance in a market which is growing significantly less than that. So I'm really happy with the overall food. We continue to max the mix. You've heard that from us for 18 months or so, and that's just about selectively managing what it is we can competitively offer to our customers and make the right return on. That's what maxing the mix is. In terms of your challenge around January competitive position, again, the way that I track it is that I look at our relative position versus the market, and we start the year in a good place.
Our final question today is at the line of Nick Coulter of Citi.
Could I just follow-up on the halo effect or impact of tobacco? Just to clarify that you haven't seeing a transitory impact on footfall, particularly in Express. And then I had a follow-up on GMO.
So look, Nick, we haven't seen what it is you're talking about. I look at the -- clearly, we do monitor, because it's clearly a product which if you want it and it's not available, it's not something you defer to next week, you look for elsewhere. So I completely understand the question. We -- the information I have at the minute is that at a total level, there's been no change in the footfall. And actually, as you look through the trading period, actually, we traded really strongly. So again, to tobacco impact on footfall, I don't have anything that I could say to you other than to look at the bigger number. We continue to track it. We've not seen a difference in large stores and small stores. But -- and as I said earlier, availability is rising quickly. By the end of this weekend, we expect to be back up at the high 90s, so we're through that particular challenge. So your second question?
And then could you talk about the Christmas trend in GMO, general merchandise online, and I guess an update on the execution of the mix strategy in that particular area, if you could?
Yes, Nick, obviously, GMO online is really a very small part of our total business. And as I've said before, we remain competitive, but it's not something that we have deliberately pushed hard. We focused in other areas of the business. The bit that we wanted, and this is where we know what we're strategically trying to do and the market is trying to understand, is the bits that we want to drive in our general merchandise offer both in-store and online, really quite happy with that performance, that's the 6% growth in those exclusive brands for Tesco. But as you know, GMO, small part of the business and challenge from a profitability point of view, so growing hard in places that are unprofitable is not a sustainable thing for my customers or for me.
Okay. As that was the last question we had time for, may I please pass the call back to you for any closing comments at this stage?
Okay, Hugh, thank you very much. Thank you very much, everybody, for joining the call. I know it's been a busy day, busy week for you. As I said earlier, I'm really pleased with the progress we're making. We enter the final weeks of the year. We have confidence in the plans, we have confidence in the outlook that's out there. And we remain sort of firmly on track to deliver what we said into the medium term. The contribution of colleagues, the contribution of suppliers over what was an extremely busy period for Tesco is nothing short of inspirational, and I'd like to finish by thanking each and every one of those for the contribution they made to Tesco's trading performance. Have a great new year, and I'm sure I'll see you all reasonably soon. Cheers.
And this now concludes the call. Thank you all very much for attending, and you may now disconnect your lines.