Tesco raised its annual profit forecast on Thursday as the supermarket group won market share in its first half, giving it momentum in advance of the key festive trading period.
Its Irish stores saw like-for-like sales rise 4.7 per cent in the first half of the financial year, with total revenue excluding fuel and VAT at €1.7 billion for the six months. The group has a 23.5 market share in the Republic of Ireland, up 88 basis points year on year.
The group said it now expected retail adjusted operating profit, its preferred profit measure, of “around” £2.9 billion (€3.5 billion) for its 2024/25 year, up from a previous forecast of “at least” £2.8 billion. It made £2.76 billion in 2023/24.
Tesco said new stores contributed to growth, alongside ongoing investments in product quality and innovation, and store refreshes. Food sales rose 5.4 per cent, while non-food sales fell by 0.8 per cent declined as figures felt the effect of the transition to Tesco’s new partnership with The Entertainer.
Its UK sales were up 4 per cent overall.
Tesco, whose shares have risen 22 per cent so far this year, is continuing to benefit from its strategy of matching the prices of discounter Aldi on hundreds of key items, and the popularity of its Clubcard loyalty scheme, which provides lower prices for members. These programmes are being financed by taking costs out of the business.
For the first half, Tesco’s retail adjusted operating profit was £1.56 billion, up 10% on a constant currency basis.
“Our strong UK and ROI (Ireland) market share gains across the last year demonstrate our continued momentum,” CEO Ken Murphy said.
“We are in good shape, with volume growth delivering strong financial performance.” – Additional reporting: Reuters
