Business

Tesco raises profit outlook as food inflation eases

Retailer sees like-for-like sales in the Republic rise 6.9% in first half of its trading year

Tesco said food inflation should continue to fall. Photograph: Nicholas T Ansell/PA Wire

Wed Oct 4 2023 - 07:49

Tesco, Britain’s biggest retailer, on Wednesday raised its profit guidance for the year as it reported a better-than-expected 13.5 per cent rise in first half core profit and signalled that food inflation would continue to fall.

The group, which has a 22 per cent share of Ireland’s grocery market, said it now expected 2023/2024 retail adjusted operating profit, its preferred metric, to be between £2.6 billion (€3 billion) and £2.7 billion.

It was previously forecasting about £2.5 billion.

In the first half, Tesco made retail adjusted operating profit of £1.42 billion, ahead of analysts’ average forecast of £1.35 billion and the £1.25 billion made in the same period last year.

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Group sales, excluding VAT sales tax and fuel, rose 8.9 per cent to £30.7 billion.

Republic of Ireland like-for-like sales were up 6.9 per cent in the first half, while UK like-for-like sales were up 8.7 per cent, having been up 9 per cent in the first quarter.

Commenting on the Tesco Ireland half-year performance, Natasha Adams, chief executive of the Irish unit said its Clubcard sales, which offer members of the rewards scheme certain price reductions, were “performing strongly for our business”.

“I am pleased with the strong performance in the half year, as we continue to see the strong sales flow-through of the newest stores in our portfolio, including ... in Galway and at Adamstown, Dublin.”

Tesco’s group chief executive Ken Murphy said: “Food inflation fell across the half and while external pressures remain, we expect that it will continue to do so in the second half of the year.” – Reuters

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