Tesco PLC (LSE:TSCO), the UK’s biggest food retailer, held its full-year profit guidance as it followed rival J Sainsbury PLC (LSE:SBRY) in reporting strong Christmas sales despite the ongoing cost-of-living crisis.
The FTSE 100-listed group forecast retail adjusted operating profit of between £2.4bn and £2.5bn, retail free cash flow of at least £1.8bn and Bank adjusted operating profit of c.£120mln to £160mln for its 2022/23 financial year.
In a trading update, the company reported UK like-for-like sales rose 4.3% in the third quarter to 26 November 2022 and jumped 7.2% in the following six weeks to 7 January, which included the key festive period,
Tesco said it has a 27.5% share of the UK’s grocery market, and claimed it is the only full-line grocer to increase market share when compared to before the pandemic.
Including the Republic and Ireland and Booker Group (LSE:BOK), sales in the third quarter rose 5.7% with Christmas sales up 7.9%.
Tesco said its strong performance was driven by focus on value and quality, with particular strength in fresh food (up +8.1%) and a strong value proposition.
Continued strong growth was seen across large stores and convenience, while online sales returned to growth with sales 59% higher than pre-pandemic and participation stabilising at around 13%.
Sales at Tesco Bank were up 14.6%, driven by an increase in credit card spending and money services transactions, as customer behaviour continued to normalise post-pandemic.
Ken Murphy, chief executive, said: “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 ahead."