Tesco, the U.K. grocer, has increased its profit guidance for fiscal year 2024, citing stronger-than-expected volume growth in the U.K. market over the Christmas period. The company now expects its retail adjusted operating profit, which excludes exceptional and one-off items, to be approximately £2.75 billion ($3.50 billion). This is higher than the previous guidance range of £2.6 billion to £2.7 billion, and represents an increase from £2.49 billion in fiscal 2023.
Strong Retail Sales Performance
In the 19 weeks leading up to January 6th, Tesco’s like-for-like retail sales increased by 6.4% compared to the previous year. This growth was higher during the Christmas period, with a rise of 6.6%. In the U.K., Tesco experienced a significant boost in like-for-like sales, which grew by 7.5% over the 19-week period and by 6.8% during Christmas.
Market Share Gains and Fresh Food Success
CEO Ken Murphy highlighted Tesco’s robust market share performance in the U.K., attributing it to consistent volume growth and notable strength in the fresh food segment. The company’s strategy of offering a full Christmas dinner for just £2.09 per person contributed to record sales in the weeks leading up to Christmas.
Revised Profit Projections
Tesco now anticipates that its retail free-cash-flow generation will reach approximately £2.0 billion, compared to the previous guidance range of £1.8 billion to £2.0 billion. However, the bank adjusted operating profit guidance remains unchanged at between £130 million and £160 million.