Supermarket titan Tesco revises its profit forecast upwards after a robust trading period, reflecting its dominating position in the UK grocery market.
- In the first half of fiscal 2024, Tesco experienced a 3.5% increase in sales, reaching £31.5 million, surpassing previous figures from 2023.
- The company’s operating profit saw a notable rise of 13%, driven by organic growth in its retail operations, amounting to £1.6 billion.
- CEO Ken Murphy attributes this success to strategic price reductions and enhanced product offerings, with customer satisfaction notably improving.
- Following this financial triumph, Tesco plans to increase its interim dividend per share, marking a 10.4% uplift, reflecting its commitment to shareholder value.
Tesco, as the leading supermarket chain in the UK, has upwardly revised its profit guidance, demonstrating a strong commitment to achieving financial targets. This comes after it adjusted its operating profit guidance to £2.9 billion from £2.8 billion. Sales in the first half of fiscal 2024 increased by 3.5%, totalling £31.5 million, compared to the previous year’s £30.4 million.
Driven predominantly by retail operations, Tesco’s statutory revenue has grown by 2.9% to £34.7 million, illustrating the company’s resilience and efficiency in a competitive market. Operating profit surged by 13% to £1.6 billion, while pre-tax profit rose by nearly 20%, from £1.2 billion to £1.4 billion. These impressive figures underline Tesco’s robust financial health.
An increase in market share, now at 27.8% per Kantar’s grocery data, highlights Tesco’s dominant position, having risen by 0.6% compared to last year. CEO Ken Murphy credits this achievement to a focused strategy on value, quality, and service, which has encouraged more consumers to choose Tesco for their shopping needs.
Murphy further emphasises the company’s efforts in slashing prices on thousands of product lines and enhancing over 860 products in collaboration with suppliers, which has significantly improved customer satisfaction scores. “We are as competitive as we have ever been,” declares Murphy, underlining the company’s strategic thrust on price competition and service enhancement.
In terms of shareholder returns, Tesco has increased its interim dividend per share by 10.4% to 4.25p, reflecting a strong commitment to delivering shareholder value. The rise in adjusted diluted earnings per share by 23.7% to 14.45p further supports this positive outlook. According to Matt Dorset, an equity analyst at Quilter Cheviot, Tesco’s performance exceeded expectations, showcasing its adept management in navigating market challenges.
Tesco’s strong performance and strategic initiatives indicate its continued growth and effective market positioning, underscoring its robust financial trajectory.
