Supermarket chain Tesco has forecast rising profits this year and announced a £1 billion (€1.17 billion) share buyback, as it lures more shoppers to its stores and consumer sentiment improves.
The company posted a 7.2 per cent increase in sales for the year to February, to £61.5 billion, as inflationary pressures “lessened substantially”, while retail adjusted operating profit – which excludes results from Tesco Bank – rose 10.9 per cent to £2.76 billion. The company expects that to rise to at least £2.8 billion this year.
In the Republic, sales were up 6.8 per cent on a like for like basis over the past year, totalling £2.89 billion (€3.37). A spokeswoman said volume growth in fresh food had been “supported by an extensive refresh in 22 stores, with new and improved produce and bakery areas and innovations in coffee, hot food and food-on-the-go offers”.
Home and clothing sales fell by 3.9 per cent due to some reallocation of space towards food.
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Share in Tesco were up almost 5 per cent at 300p in afternoon trading on Wednesday.
Group pretax profit jumped to £2.3 billion from £882 million the previous year, when it took a one-off £982 million non-cash hit.
Tesco also announced plans to buy back £1 billion of shares over the next 12 months on Wednesday, following the sale of its banking business to Barclays. The supermarket group also said it would hand £70 million to about 220,000 full-time workers, worth roughly £300 per worker, due to the “strong” performance.
Chief executive Ken Murphy said customers were choosing to shop more at Tesco, “which is reflected in growing market share”, adding its sales were boosted by its premium range Finest.
The grocer’s preliminary results follow recent industry data showing UK food inflation fell to 3.7 per cent in March, the lowest level since April 2022, as price pressures continued to ease.
Mr Murphy said: “There is loads of uncertainty out there but I see a gentle improvement in customer sentiment . . . so on the whole I’m feeling quite positive.”
Finance chief Imran Nawaz said that although its profit margins had recovered to pre-pandemic levels, they were still modest, at 4.1 per cent.
“Our business remains dynamic, and we continue to grow our store footprint, with a further three new stores opening this week, to bring our total stores to a record 173,” Natasha Adams, chief executive of the group’s Irish business said, welcoming the “strong performance of the business over the past 12 months”. – Copyright The Financial Times Limited 2024
