Tesco PLC (LSE:TSCO) is expected to highlight the impacts of disinflation, market share gains, tough European operations and the success of its wholesale business when it reports first-quarter results next Friday.
Sales during the first three months of the financial year are expected to lift by between 5-6% in the UK, by 2.5-3.5% in Ireland and by 0-1% in central Europe, according to Shore Capital’s veteran retail analyst Clive Black.
Black, basing the figures of Tesco’s exit rate from the 2024 financial year and secondary market share data, said the supermarket has been able to grow sales despite being up against tough comparatives and pricing pressure.
With weather conditions struggling to provide a boost to the group, Black has turned his focus to Tesco moving into market share “gain mode”.
“We point out that Tesco has virtually no benefit from new space at this time, making its share gains in the core market all the more impressive,” he said.
Last month, Tesco saw its market share lift year-on-year by 0.5 percentage points to 27.6%, according to Kantar, which it said was its largest annual share gain in 16 months.
Black also praised a recent acquisition by Tesco’s “highly successful wholesale business” Booker, which he said underscores “its market-leading position in the UK.”
On Thursday, it was revealed Booker had agreed to purchase Venus, the on-trade alcohol supplier, for an undisclosed fee.
Black said the deal will help Booker with broadening its reach, “notably in the premium catering arena”.
“It shows that Tesco has growth aspirations in a controlled and selective manner… hence, we see merit and applaud the bolt-on purchase,” the Shore Capital analyst concluded.
Booker sales are expected to rise by between 3-4% during the first quarter.