Tesco has raised its profit guidance following a significant profit rise.
- The supermarket reports a 10% increase in first-half profit.
- Retail adjusted operating profit is expected to hit £2.9bn.
- UK sales have shown notable growth over the year.
- Innovations and competitive pricing contribute to Tesco’s success.
Tesco, the UK’s leading supermarket chain, has adjusted its profit forecast upwards after reporting a 10% increase in its first-half profits. The company now anticipates its retail adjusted operating profit will reach approximately £2.9 billion, a rise from the earlier prediction of at least £2.8 billion.
Over the half-year period ending 24th August, Tesco’s retail adjusted operating profit reached £1.56 billion, with sales increasing by 4% to £31.5 billion. Significantly, UK like-for-like sales rose by 3.5% in the second quarter, following a 4.6% increase in the first quarter.
A key element of Tesco’s current strategy is its focus on lowering prices across everyday grocery lines, a move made possible as inflation pressures ease. CEO Ken Murphy commented on this approach, stating that Tesco’s blend of price, quality, and innovation ensures it remains highly competitive – it has been the UK’s cheapest full-line grocer for nearly two years.
The rise in sales volumes, driven by increased purchases of fresh food and a near 15% increase in the sales of the ‘Tesco Finest’ premium range, has significantly bolstered Tesco’s financial performance.
Success has also been attributed to Tesco’s pricing strategy, which matches discount retailer Aldi on hundreds of products, and the broad adoption of its Clubcard loyalty programme, which achieved 82% penetration in the UK markets.
Looking ahead, Tesco plans to grow its Tesco Marketplace, currently offering over 150,000 products from selected partners. Further investments include a new chilled distribution centre in Aylesford, scheduled to open by mid-2025.
As a result of these efforts, Tesco has seen its market share increase by 62 basis points to 27.8% in the 12 weeks leading up to 1st September, marking its highest level since January 2022, as reported by Kantar. Ken Murphy highlighted that the company’s focus on value and quality, alongside an improved customer experience, drives this strong financial performance.
Tesco’s strategic initiatives and focus on competitive pricing are solidifying its position and driving profitability.
