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Tesco expects profits for the year to be higher than previously forecast after the UK’s largest supermarket reported a rise in half-year sales and profits.
The company, which accounts for 27.8 per cent of the UK grocery market, said it had raised its forecast for annual retail adjusted operating profit, its preferred metric, to about £2.9bn, up from previous guidance of “at least £2.8bn”.
Group sales rose 3.5 per cent to £31.4bn in the six months to August 24, while pre-tax profit was up 20 per cent to £1.4bn.
Chief executive Ken Murphy said Tesco was “in good shape, with volume growth delivering strong financial performance” as inflation comes down.
The supermarket chain has been using schemes such as Aldi Price Match and Clubcard Prices, as well as seeking to sell more of its upmarket Finest products, to help to increase sales and gain market share in a highly competitive UK grocery market.
Sales were driven by volume rather than price, Tesco said, with retail like-for-like sales up 2.9 per cent during the period.
Retail adjusted operating profit was up 10 per cent to £1.5bn, partly as a result of market share gains, while statutory operating profit was 13 per cent higher at £1.6bn.
Murphy, who joined in 2020, said Tesco’s focus was to deliver “top-line growth, grow profit and generate cash”.
He said last month that Tesco was planning to vastly expand its application of artificial intelligence to customer data to attract more customers by personalising how they shop.
Murphy said the grocer could harness AI alongside data from its Clubcard loyalty discount scheme to suggest shoppers make healthier choices and reduce waste.
“I can see it nudging you over time, saying: ‘I’ve noticed over time in your shopping basket that your sodium salt content is 250% of your daily recommended allowance. I would recommend you substitute this, this and this’,” he said, speaking at the FT’s Future of Retail summit.
