Tesco, the UK’s largest supermarket chain, has revised its profit guidance upwards due to a strong trading period.
- The retailer adjusted its operating profit guidance from £2.8bn to £2.9bn after better-than-expected volume growth.
- Tesco saw a 3.5% increase in sales over the first half of the fiscal year, rising to £31.5m.
- Operating profit and pre-tax profit showed significant growth, with a 13% rise in operating profit.
- CEO Ken Murphy highlighted price reductions and product improvements as key factors in improved customer satisfaction.
Tesco, the leading grocery chain in the UK, has raised its operating profit guidance from £2.8 billion to £2.9 billion, a decision driven by a stronger-than-anticipated trading period characterised by robust volume growth. This revision reflects the company’s substantial sales increase of 3.5% over the first half of the fiscal year, culminating in £31.5 million, up from £30.4 million the previous year.
The company’s performance was bolstered by a notable 13% rise in operating profit, amounting to £1.6 billion. This increase was primarily fuelled by retail operations, contributing to a nearly 20% surge in pre-tax profit from £1.2 billion to £1.4 billion. Additionally, Tesco’s statutory revenue grew by 2.9% to £34.7 million, while adjusted diluted earnings per share escalated by 23.7% to 14.45 pence.
In response to this financial success, Tesco has increased its interim dividend per share by 10.4%, now reaching 4.25 pence. Market dominance was further evidenced by the latest Kantar figures, placing Tesco at a market share of 27.8%, an increase of 0.6% from the previous year. CEO Ken Murphy attributed the company’s success to enhanced value, quality, and service offerings which have been well received by consumers.
Murphy’s strategy emphasised competitive pricing and product development, with over 860 products either launched or improved. He stated: “We have lowered prices on thousands of lines… and our customer satisfaction scores continue to improve across a broad range of measures.” This commitment ensures that Tesco remains highly competitive and attractive to customers.
The company’s digital strategy, particularly through its Clubcard programme, was highlighted by the CEO’s mention of AI-driven personalisation to influence shopping habits, with sales penetration increases noted. Equity analyst Matt Dorset lauded the results, noting that the price cuts on over 860 products have bolstered consumer relations and satisfaction.
Tesco’s strong financial performance underlines its strategic effectiveness in enhancing customer value and market presence.
