Tesco has significantly raised its profit expectations for the year after experiencing a notable 10% increase in its first-half profit.
- The supermarket chain now anticipates a retail adjusted operating profit of approximately £2.9 billion, surpassing its previous forecast.
- Sales figures have shown considerable growth, with a 4% rise in total sales and a 3.5% increase in UK like-for-like sales during the second quarter.
- Inflation easing allowed Tesco to lower prices across everyday grocery lines, enhancing its competitive position.
- CEO Ken Murphy emphasises Tesco’s commitment to maintaining strong value, quality, and innovation for consumers.
Tesco has adjusted its profit outlook for the current year, forecasting around £2.9 billion in retail adjusted operating profit. This revision comes on the back of a successful first half, which saw a 10% increase in profits and a 4% growth in sales, totalling £31.5 billion as of the end of August 2024.
Throughout the second quarter, UK like-for-like sales rose by 3.5%, following a 4.6% increase in the first quarter. Notably, Tesco has been able to reduce prices across many basic grocery items due in part to the alleviation of inflationary pressures. CEO Ken Murphy stated that Tesco remains ‘as competitive as we have ever been’, attributing part of this success to the company’s continuous quality and innovation efforts.
Increased sales volumes, especially in fresh food, have significantly contributed to Tesco’s improved performance. The brand’s ‘Tesco Finest’ premium range also saw a notable uptick in sales, with volumes rising nearly 15%.
The company’s strategy of price matching with discount retailer Aldi has been beneficial, along with the increased penetration of its Clubcard programme. Clubcard usage has reached 82% in the UK, indicating strong customer engagement.
Further expansion is on the horizon for Tesco, with plans to grow its Tesco Marketplace and invest in a new chilled distribution facility in Aylesford. As of early September, Tesco’s market share had increased by 62 basis points to 27.8%, its highest since January 2022.
Tesco’s robust financial performance and strategic initiatives indicate a promising future as the company continues to deliver value and quality to its customers.
