Tesco PLC on Thursday reiterated annual profit and cash flow guidance backed by strong UK sales.
The Welwyn Garden City-based grocer said retail like-for-like sales grew 3.8% on-year in the six weeks to January 4, which included the key festive period. Sales growth picked up from the 2.8% achieved in the 13 weeks to November 22, the supermarket chain’s third-quarter. For the combined 19 week period, like-for-like sales rose 3.1%.
Total sales amounted to £23.94 billion over the 19 weeks, a rise of 3.3% on-year at actual rates, or 4.0% at constant currency.
‘We invested to bring the best value, quality and service to everyone, no matter how or where they shopped with us. As a result, we delivered our biggest ever Christmas, with continued market share growth and switching gains,’ Chief Executive Ken Murphy said.
Tesco expects retail adjusted operating profit for the financial year of £2.9 billion, its guidance affirmed. It would represent a rise from £2.76 billion in financial 2024.
In addition, the firm continues to expect retail free cash flow within its medium-term guidance range of £1.4 billion to £1.8 billion and adjusted operating profit contribution from the retained Tesco Bank business of around £120 million.
Despite this, shares in Tesco were 1.7% lower at 363.80 pence each in London in early trading on Thursday. The wider FTSE 100 was up 0.3%.
Tesco said UK sales rose 3.9% in the 19 week period and 4.1% the five-weeks. Food sales increased 4.7%, primarily driven by volume growth across the period, with a particularly strong contribution from fresh food. Sales of Tesco’s high-end Finest range leapt more than 15%.
Non-food sales (excluding toys) rose 4.0%, with growth in both home and clothing.
The performance at cash-and-carry outlet Booker was not as stellar. Sales fell 1.3% reflecting a continued decline in the tobacco market and weakness in parts of the fast-food market serviced by Best Food Logistics.
Sales in the Republic of Ireland rose 4.4% in the 19 weeks and in Central Europe by 3.5%.
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