9th Jan 2025 08:41
(Alliance News) - 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 GBP23.94 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 GBP2.9 billion, its guidance affirmed. It would represent a rise from GBP2.76 billion in financial 2024.
In addition, the firm continues to expect retail free cash flow within its medium-term guidance range of GBP1.4 billion to GBP1.8 billion and adjusted operating profit contribution from the retained Tesco Bank business of around GBP120 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%.
By Jeremy Cutler, Alliance News reporter
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