After a “strong Christmas” period, Tesco now anticipates its full-year adjusted operating profit will reach the upper end of its £2.9bn to £3.1bn forecast range.
In its Q3 update, the FTSE 100 giant revealed its total group sales reached £24.9bn for the 19-week period.
It was the Republic of Ireland that had a strong food sales growth of 5.2 per cent, “driven by fresh food”, while Central Europe’s like-for-like sales grew by 2.3 per cent.
Tesco’s UK market share rose to nearly 29 per cent, the highest level in more than 10 years, with 32 consecutive periods of year-on-year gains.
Chief executive Ken Murphy said he was “delighted with the strong Christmas” the supermarket giant delivered after sales of the Finest range grew by 13 per cent, with party food specifically surging by 22 per cent over the holiday period.
Online sales grew double-digit, and Tesco’s on-demand delivery, Whoosh, also performed “strongly”, with more than 250,000 new customers over the period.
Following the strong Christmas performance, the listed supermarket now expects to deliver the guidance range for its full-year 25/26 group adjusted operating profit that it issued in October.
“Competition is as intense as ever, and we know value remains a priority for customers,” stated Murphy.
Share price drops
Despite the results, Tesco’s share price is down by nearly 5 per cent on Thursday morning.
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, explained that despite the results, performance in its wholesale business, Booker, “wasn’t as good as hoped due to the long-running decline in tobacco sales”.
He noted that the net effect was that the supermarket chain “only nudged” its full-year underlying operating profit guidance to the top end, highlighting that “many had been hoping for a bigger upgrade”.
However, the analyst pointed out that the business continues to execute well despite the recent challenges, adding that there is “plenty of cash pumping around the business to fund this investment for the future”.
“For investors looking for a long-term buy-and-hold, Tesco should certainly make it onto the potential shopping list,” he added.