Tesco stated today that it was “well positioned” for the rest of the year after posting robust first-quarter trading figures, noting that consumer sentiment was slowly improving as food inflation eases.
Over the 13 weeks to 25 May, the group’s like-for-like sales in the UK were up 4.6%, with CEO Ken Murphy highlighting that Tesco’s market share was growing more than at any other time in the past two years.
Food sales grew 5.0%, with “strong” volume growth, particularly in fresh food. However, non-food sales were up just 0.7% amid the tough trading conditions.
Tesco pointed to data showing it was the cheapest of the full-line grocers for 19 consecutive periods, helped by the combination of its Aldi Price Match pledge on around 700 lines, Low Everyday Prices with over 1,000 prices locked, and Clubcard Prices scheme.
Amid more home dining, sales of Tesco’s Finest range also continued to grow strongly, up 12.5%, after making gains from premium retailers.
The supermarket stated that it saw growth in all channels, with online sales up 8.9% after a significant contribution from its Whoosh rapid delivery service.
In the Republic of Ireland, Tesco saw like-for-like sales rise 4.4% after making further market share gains. Food sales in the country were up 5.1%, driven by strong fresh volumes.
In its Booker division, like-for-like sales slipped 1.3%, reflecting a continued decline in the tobacco market decline and weakness in parts of the fast food market serviced by its Best Food Logistics operation. However, its core retail and catering sales were up 1.0% and 2.2% respectively, despite being up against “exceptional performance” last year.
In Central Europe, Tesco saw sales edge up 0.6%, driven by strengthening food volumes (+2.8%) after investment in pricing.
“We’ve continued to build momentum in the business, with strong volume growth across the UK, Republic of Ireland and Central Europe supported by easing inflation,” said Murphy.
He noted the shoppers were switching to Tesco from other retailers, “shopping with us more often and with more in their baskets”.
Meanwhile, the CEO said the business was seeing a “gentle improvement in consumer sentiment”, with food inflation expected to be in the low single digits for the rest of the year.
Tesco kept its forecast for retail adjusted operating profit, its preferred profit measure, of “at least” £2.8bn for its 2024/25 year, versus £2.76 in 2023/24.
“Following another strong quarter, we’re pleased to reiterate our guidance for the full year, with sales trends in line with our expectations and the business well-positioned for the months ahead,” concluded Murphy.
Tesco’s share price has risen 15% over the last year, with a further 2% increase this morning.
The results came ahead of Tesco’s AGM today, at which its board is expected to be asked by shareholders to justify Murphy’s near £10m pay package. Investors have become more vocal in their opposition to boardroom pay deals they deem excessive amid a cost of living crisis.
NAM Implications:
- Tesco clearly on a roll…
- And this is how:
- Aldi Price Match pledge on around 700 lines
- Low Everyday Prices with over 1,000 prices locked
- Clubcard Prices scheme
- Benefitting from switching, Whoosh rapid delivery service, and online…
- …in the UK and Ireland.
- How do your Tesco sales compare?
