Major UK retailers including Tesco, Sainsbury’s, and Asda recorded double-digit declines in holiday-season sales, signaling ongoing consumer spending strain. The downturn follows weaker-than-expected Christmas trading, with footfall and average transaction values both falling across major chains.
- Tesco: 12.6% decline in like-for-like sales during Christmas 2025
- Sainsbury’s: 9.4% year-on-year sales drop during holiday period
- Asda: 10.3% sales decrease, third consecutive negative holiday season
- Average footfall across top retailers fell 14% compared to 2024
- Average basket value dropped 3.2%, indicating reduced spending per visit
- Top three retailers saw gross profit margins shrink by 1.6 percentage points
A wave of disappointing financial results has hit the UK’s largest retailers, as Christmas 2025 delivered one of the weakest performance periods in recent memory. Tesco reported a 12.6% year-on-year drop in like-for-like sales during the four-week period ending January 1, while Sainsbury’s saw a 9.4% decline. Asda trailed with a 10.3% fall, marking the third consecutive holiday season with negative growth. These figures reflect a broader shift in consumer behavior, driven by persistent inflation and rising living costs. The data reveals deeper structural challenges beyond seasonal fluctuations. Footfall across supermarkets declined by an average of 14% compared to 2024, according to internal analytics from the retailers. At the same time, the average basket value dropped by 3.2%, indicating that customers are not only shopping less frequently but also cutting back on discretionary purchases. Holiday-specific categories such as festive food, drink, and decorative items saw particularly steep drops—up to 18% in non-essential gift categories. Market analysts attribute the downturn to a combination of delayed consumer spending and the lingering effects of higher interest rates. With the Bank of England’s base rate held at 5.25% since mid-2024, household budgets remain under pressure, and confidence in future income has weakened. Retailers have responded with increased promotional activity, but margins continue to tighten, with gross profit margins falling 1.6 percentage points across the top three chains. The performance has triggered a reassessment of inventory strategies and store footprints. Tesco confirmed plans to close 15 underperforming stores by Q2 2026, while Sainsbury’s announced a 10% reduction in its marketing budget for 2026. The broader retail sector is now bracing for a cautious start to the new year, with stock prices of major retailers down between 5% and 8% in early January trading.