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Tesco has upgraded profit forecasts for the year after boosting volumes by more than expected in the first half.
Britain’s biggest supermarket increased group sales, excluding VAT and fuel, 3.5% to £31.5bn in the 26 weeks ended 24 August as it lowered prices and took the fight to the discounters.
CEO Ken Murphy said the growth was volume led, with like-for-like sales up 2.9% in the half.
Adjusted operating profits soared 15.6% to £1.6bn as a result, while pre-tax profits jumped 20% to £1.4bn.
The retailer also raised its full-year expectations thanks to the strong performance and forecast it would now deliver adjusted operating profits of about £2.9bn. It previously said it expected profits of “at least” £2.8bn.
Tesco has employed a number of schemes to increase competitiveness, including matching prices with Aldi on 700 lines and coming up with 8,000 Clubcard Prices deals each week.
It also focused on pushing the Finest brand – which won the Own Label Range of the Year prize at the 2024 Grocer Gold Awards – with volumes flying 14.9% higher in the period as more than 20 million customers shopped the own label range.
“We’ve been working really hard to offer our customers the best possible value, quality, and service and they are shopping more at Tesco as a result,” Murphy said.
“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.”
Booker, the group’s wholesale arm, saw like-for-like sales fall 1.9% in the half, reflecting a decline in the tobacco market and Best Food Logistics volumes.
Morning update
Catering operator SSP Group has maintained its guidance for the year thanks to “good trading momentum” in the fourth quarter.
Revenue growth in the final three months of the year to 30 September totalled 15%, including like-for-like growth of 6%.
The Upper Crust owner said in the trading update that full-year revenues were expected to be 17% higher at £3.5bn, with operating profits set to soar 30% to £210m-£220m.
Sales increased 12% in the UK in the fourth quarter, driven by high demand for air travel and a lower level of disruption on the railways.
CEO Patrick Coveney said: “Overall, this year, we expect the group to deliver a significant increase in year-on-year profitability and margins.
“Our focus is now on optimising the performance of our business, building returns on the high level of recent investment, and the delivery of sustainable and compounding growth and returns in the years to come.”
The FTSE 100 opened 0.3% higher at 8,314.75pts.
Shares in Tesco climbed 1.5% to 360.2p as markets reacted to the profits upgrade. The supermarket is now up 23% in the year to date.
SSP slipped by 0.4% to 156.6p.
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