U.K. Grocer Tesco Posts Sales Growth Lifted by Volumes, Market Share Gains — Update
By Elena Vardon
Tesco's sales rose in the first quarter and the company backed its guidance for the year, with easing inflation supporting strong volume growth and market share in its core U.K. market.
The supermarket chain on Friday posted 15.305 billion pounds ($19.53 billion) in group retail sales excluding value-added tax and fuel for the 13 weeks ended May 25. Like-for-like group retail sales grew 3.4% over the period.
In the U.K., where the company makes the bulk of its revenue, sales rose 4.6% on a like-for-like basis in the quarter. Sales in Ireland were up 4.4% while those in central Europe edged up 0.6%.
Chief Executive Ken Murphy said the group has increased its competitiveness. "Our market share reflects this, growing more than at any other time in the past two years, with customers switching to us from other retailers, shopping with us more often and with more in their baskets," he added.
Tesco holds a 27.6% share of the grocery market in Britain, almost as much as that of its closest peers Sainsbury's and Asda combined, according to the latest figures from data provider Kantar.
Murphy added that sales trends were in line with its expectations and reiterated its outlook for fiscal 2025.
In April, the grocer guided for retail adjusted operating profit--its preferred metric, which strips out exceptional and other one-off items--of at least GBP2.8 billion for the year, in addition to GBP80 million from its insurance and money services which the company retained from the recent sale of its banking branch to Barclays. This compares with a GBP2.94 billion estimate taken from a company-compiled consensus.
Tesco expects retail cash flow in the GBP1.4 billion to GBP1.8 billion range.
Analysts noted that the update reflects an encouraging start of the year and confirmed the group's expected strong sales trajectory as well as its leading position in the market.
Shares in London were up 1.6% to 307 pence at 0739 GMT, after trading flat in early exchanges. The stock has gained 16% on a 12 month basis.
Write to Elena Vardon at elena.vardon@wsj.com
(END) Dow Jones Newswires
June 14, 2024 04:15 ET (08:15 GMT)
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