Tesco PLC (LSE:TSCO) said it is upgrading its earnings forecast following a strong third quarter that included a bumper performance over the key Christmas period.
The supermarket giant said operating profit for the 12 months would now be in the order of £2.75 billion compared with previous guidance of £2.6-£2.7 billion. Free cash flow generation is predicted to be a very healthy £2 billion, while profits from its banking operation will be in the £130-£160 million range.
For the key six weeks ahead of the festive season, underlying sales were 6.8%, rising to 9.2% four weeks out from the big day.
Against stiff competition from discounters such as Aldi and Lidl, Tesco managed to improve marginally its share to almost 28% of the UK grocery market. Over the 13 weeks ended 6 January, like-for-like grocer sales across the business were up 6.6%.
Sainsbury by comparison saw its sales grow 9.3% in a similar timeframe, but saw its shares hit by the lacklustre performance of its Argos general retail business.