13th Jan 2022 09:31
(Alliance News) - Tesco PLC on Thursday upgraded profit guidance for financial 2022, following a strong performance over its third quarter and the Christmas period.
The UK's largest supermarket chain said it expects a retail operating profit for the financial year that ends in February "slightly above" estimates of GBP2.5 billion to GBP2.6 billion, which would be as much as a 31% rise on the profit of GBP1.99 billion in financial 2021.
Total retail sales for the group were up 2.6% on a one-year like-for-like basis in the 19 weeks ended January 8, 2022. Over Christmas, sales grew 3.2% on a year before, and Tesco achieved the highest market share growth in Ireland.
UK sales continued to have "strong momentum" this year, with the highest market share in four year, growing both in-store and online. Online sales were ahead of pre-Covid levels, with 59% growth on a two-year like-for-like basis, and roughly 1.2 million orders per week, gaining the highest market share since the pandemic hit.
Tesco subsidiary Booker Group Ltd, encompassing Premier, Londis, and Budgens shops performed "particularly well", with sales supported by strong availability of products. The catering division of the subsidiary also experienced strong growth during the 19 week period, on a one-year and two-year basis, despite the impact of the Omicron variant on hospitality.
Tesco saw a significant boost to clothing and general merchandise sales in central Europe, with strong food sales, as Covid-19 restrictions eased.
Tesco's Bank division fully acquired Tesco Underwriting from Ageas in May 2021, which drove a 34% increase in sales over the financial year to date, but excluding the acquisition, sales declined by 5.9% for the division.
However, Tesco still predicts the bank will have an annual operating profit between GBP160 million to GBP 200 million, owing to "favourable economic forecasts on [its] provision for expected credit losses". This would be quite a turnaround from an operating loss of GBP175 million in financial 2021.
Tesco's share price fell by 1.4% to 288.15 pence each on Thursday morning in London. The stock is down 6.0% over the past 12 months.
Tesco Chief Executive, Ken Murphy commented: "Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range. This put us in a strong position to meet customers' needs as, once again, COVID-19 led to a greater focus on celebrating at home. As a result, we outperformed the market, growing market share and strengthening our value position."
By Elizabeth Winter; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Tesco