Tesco has raised its profit guidance for the year after posting a 10% rise in first-half profit.
The supermarket giant now expects to deliver around £2.9bn in retail adjusted operating profit, up from its previous forecast of “at least £2.8 bn”.
Tesco’s retail adjusted operating profit hit £1.56bn, up 10% on the previous year while sales grew 4% to £31.5bn over the half year to August 24.
UK like-for-like sales rose 3.5% in its second quarter, having been up 4.6% in the first quarter.
The UK’s largest supermarket said it had lowered prices across its everyday grocery lines as inflation continued to ease.
CEO Ken Murphy said: “The combination of price, quality and innovation means we are as competitive as we have ever been, and we have been the cheapest full-line grocer for nearly two years.”
An increase in sales volumes, particularly across fresh food, helped push up the overall figure, as shoppers put more items in their baskets.
It also noted a nearly 15% increase in sales volumes of its “Tesco Finest” premium range.
Tesco is reaping the rewards of its approach to match prices with discount retailer Aldi on hundreds of products, along with the success of its Clubcard loyalty programme. Clubcard sales penetration increased year-on-year across all markets, reaching 82% in the UK.
The grocer said it plans to expand its Tesco Marketplace, which now offers over 150,000 products from selected partners, and will also invest in a new chilled distribution centre in Aylesford, set to open by summer 2025.
Tesco’s market share rose 62 basis points to 27.8% in the 12 weeks to 1 September year-on-year, its highest level since January 2022, according to Kantar.
Murphy added: “We’ve been working really hard to offer our customers the best possible value, quality, and service and they are shopping more at Tesco as a result. We have lowered prices on thousands of lines, launched or improved over 860 products in partnership with our suppliers and growers, and our customer satisfaction scores continue to improve across a broad range of measures.
“We are in good shape, with volume growth delivering strong financial performance. This builds on our track record of delivery for all our stakeholders. Our strong momentum allows us to continue to focus on value, quality, innovation, and the broader customer experience, whilst investing in growth opportunities in a disciplined, returns-focused way.”
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