Tesco announced that its market share was growing more than at any other time in the past two years, as it reported a 4.6% rise in underlying quarterly sales.
On the back of these results, Britain’s largest supermarket group reiterated its annual guidance.
Shares in Tesco went up by 2.7% on Friday, extending year-on-year gains to 17.3%, after chief executive Ken Murphy said that the group had enjoyed a “strong” first quarter.
Murphy added that the retailer was “well positioned” for the rest of the year.
In Line With Expectations
Tesco’s market share rose by 50 basis points, to 27.6%, in the 12 weeks to 12 May, year on year, according to market researcher Kantar.
Murphy said, “Customers [are] switching to us from other retailers, shopping with us more often, and with more in their baskets.”
He added that sales trends were in line with the group’s expectations.
In contrast to Tesco’s update, other recent UK retail data has been subdued, with wet weather and the ongoing cost-of-living crisis hurting consumer spending in May.
One survey, published on 4 June, showed the weakest spending growth in more than three years.
Murphy told reporters, “What we see in the data is a gentle upward tick in optimism.”
He added that this reflected easing inflation and a recent increase in the national minimum wage.
Murphy said that Tesco anticipated “very low single-digit” food inflation for the rest of the year.
Forecast
Tesco has benefitted from a price-matching strategy, wherein it matches prices with Aldi.
Its Clubcard loyalty scheme, which provides lower prices for members, has also proved effective.
It kept its forecast for retail-adjusted operating profit – its preferred profit measure – of “at least” £2.8 billion for its 2024/25 year.
This is above £2.76 billion in 2023/24.
Murphy said that Tesco was planning for a boost in trade from the Euro 2024 soccer championship – mainly in beer, wine, barbecue food, and snacks.
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