Tesco expects profit growth after holiday sales
2023.01.12 03:01
Tesco expects profit growth after holiday sales
By Ray Johnson
Budrigannews.com – Despite an increasing cost-of-living crisis, Tesco, the largest retailer in Britain, maintained its full-year profit guidance, joining rivals in reporting stronger-than-expected Christmas sales.
UK like-for-like sales increased 7.2% in the six weeks ending on January 7, according to the supermarket group, which has a 27.5% share of the British grocery market. It said it had “great force” going into 2023.
After two years of pandemic restrictions, families have held larger Christmas gatherings and treated themselves at home rather than going out to save money, which has led to stronger-than-expected holiday sales for British supermarkets.
The United Kingdom’s No. 2 Sainsbury’s, a supermarket chain, reported a 5.9% increase in underlying sales for the Christmas quarter, and discount retailers Aldi UK and Lidl GB also reported record-breaking sales for the holiday season.
The grocery industry as a whole saw record holiday sales, according to industry data, but the growth was driven by price inflation rather than increased spending.
However, retailers in Europe are now preparing for a challenging 2023. In Britain, consumer confidence is close to record lows, and inflation of 10.7% is putting a strain on consumers’ financial resources.
Ken Murphy, the company’s chief executive, stated, “We go into the new calendar year with good momentum, and I am confident we can continue to maintain our competitiveness and deliver a strong performance relative to the market despite the challenging conditions that are ahead.”
OTC: Tesco, Instead of passing on all of its cost inflation to customers, like Sainsbury’s, it is absorbing some of it.
He stated, “I’m really pleased with our performance over this period – particularly the further strong growth at Christmas on top of the exceptional growth of the last few years,” noting that Tesco provided its “most competitive offering to date.” Tesco’s Christmas sales were particularly strong.
Tesco has benefited from a program to match Aldi’s prices on over 600 products and the popularity of a loyalty program called “Clubcard Prices” that provides cheaper deals.
Retail adjusted operating profit is expected to be between 2.4 and 2.5 billion pounds ($2.9 and $3.0 billion) in 2022-23, which is down from 2.65 billion pounds in 2021-22.
It anticipates a profit from Tesco Bank of 120-160 million pounds and retail free cash flow of at least 1.8 billion pounds.
Tesco shares have decreased by 17% over the past year, but they have increased by 7% in the past month.
