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Strong Christmas Performance and Upgrades Guidance

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Strong Christmas Performance and Upgraded Guidance

In a recent statement, Ken Murphy, Chief Executive of Tesco, expressed gratitude to the hardworking team for delivering the best Christmas performance ever. The company focused on providing great value and quality food, resulting in record sales and market share gains.

Key Points:

  1. Customer Appreciation: Murphy acknowledged the team’s dedication to helping customers celebrate Christmas and thanked colleagues for their energy.
  2. Investment in Service: Tesco increased investment in service with more staff on the shop floor, leading to market-leading availability and the best Christmas performance.
  3. Value Focus: The company offered a full Christmas dinner for £2.09 per person, contributing to record sales and market share growth.
  4. Quality and Innovation: Tesco introduced over 550 new festive products, with the Finest range experiencing a sales growth of nearly 17%.
  5. Price Reductions: Almost 2,700 prices were cut, solidifying Tesco’s position as the UK’s cheapest full-line grocer for over 14 months.
  6. Online Sales: Thanks to improved order volumes, pick rates, and availability, online sales increased by 11.5%.
  7. Community Support: Tesco customers and colleagues donated over two million meals to food banks through the Winter Food Collection.

Performance Highlights:

  1. Tesco outperformed the market with a strong market share performance of 27.9% and a Christmas like-for-like sales increase of 6.8%.
  2. ROI: The Republic of Ireland experienced the strongest market share in nine years, with a growth of +73 bps to 24.5%.
  3. Booker: A focus on value and strong execution helped retail like-for-like sales increase by 4.1% and catering like-for-like sales grow by 3.5%.
  4. Central Europe: Despite challenges, Tesco saw an encouraging response to investments in value, with improved performance and increased Clubcard sales penetration.
  5. Bank: Tesco Bank’s sales increased by 32.8%, reflecting a higher interest rate environment and continued growth in lending and insurance.

Outlook:

Due to its robust trading performance, Tesco upgraded its guidance for the current financial year. The company now expects retail-adjusted operating profit of approximately £2.75bn, exceeding the previous guidance range of £2.6bn to £2.7bn, resulting in strong retail free cash flow generation of around £2.0bn. Tesco continues to expect bank operating profit to be between £130 million and £160 million.

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