Tesco’s first-half profit climbed 10%, prompting a raised profit forecast.
- Retail adjusted operating profit projected to hit £2.9bn, surpassing prior estimates.
- Sales climbed to £31.5bn with significant growth in fresh food volumes.
- Clubcard use and price matching strategies bolster market position.
- Plans for expansion and new chilled distribution centre announced.
Tesco recorded a notable 10% uptick in its first-half profit, which led to an improved profit guidance for the year. The supermarket giant now anticipates a retail adjusted operating profit of approximately £2.9bn, elevating its earlier prediction of “at least £2.8bn”. Over the half-year to August 24, Tesco’s retail adjusted operating profit reached £1.56bn, marking a 10% rise from the previous year. Concurrently, sales escalated by 4% to total £31.5bn.
UK like-for-like sales experienced a 3.5% increase in the second quarter following a 4.6% rise in the first quarter. Tesco strategically reduced prices across everyday grocery items amidst easing inflation. This move has been part of the CEO Ken Murphy’s approach to remain competitive, as he highlighted, “The combination of price, quality and innovation means we are as competitive as we have ever been, and we have been the cheapest full-line grocer for nearly two years.“
A significant boost in sales volumes, particularly in fresh food, contributed to this growth as consumers bought more. Notably, the sales of Tesco’s premium range, “Tesco Finest“, saw a nearly 15% increase.
The company’s decision to match prices with discount retailer Aldi on numerous products, coupled with the success of its Clubcard loyalty programme, has been advantageous. Clubcard sales penetration in the UK achieved an 82% rate year-on-year.
Further expanding its market strategy, Tesco unveiled plans to broaden its Tesco Marketplace, which currently offers over 150,000 products from selected partners. Additionally, Tesco is investing in a new chilled distribution centre in Aylesford, scheduled to open by summer 2025. The company also secured a 62 basis-point increase in market share to 27.8% over the 12 weeks to 1 September, the highest since January 2022.
Tesco’s robust growth exemplifies its effective strategies in navigating competitive retail landscapes.
