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Tesco, the UK’s largest supermarket, expects profits to continue to rise this year as it lures more shoppers to its stores and consumer sentiment improves.
The FTSE 100 company posted a 7.2 per cent increase in sales for the year to February to £61.5bn, as inflationary pressures “lessened substantially”, while retail adjusted operating profit — which excludes results from Tesco Bank — rose 10.9 per cent to £2.76bn. The company expects that to rise to at least £2.8bn this year.
Pre-tax profit jumped from £882mn to £2.3bn. The company also announced plans to buy back £1bn of shares over the next 12 months following the sale of its banking business to Barclays.
Chief executive Ken Murphy said customers were choosing to shop more at Tesco, “which is reflected in growing market share”, and its sales were boosted by its premium range Finest.
He added: “We have strong momentum in our business, and are encouraged by signs of improving consumer sentiment.”
Murphy said he expected food inflation to stabilise in low single digits for the rest of the year although inflation remained sticky in cocoa, potatoes and coffee. “I see that stabilising, that kind of low single digit for the rest of the year is our planning assumption.”
William Woods at Bernstein said: “Tesco delivered a good set of results as sticky food inflation in the UK and volume recovery supports top line growth.”
