The chain reported a 13.5% leap in adjusted operating profits for the first half of its financial year to £1.4bn.
Tesco said it was now expecting annual profits of between £2.6bn and £2.7bn, up from earlier guidance of about £2.5bn.
Like-for-like sales at its supermarkets were up 7.8% over the first half of the 2023/24 financial year, compared to the same period last year. That figure rose to 8.7% solely for the UK.
Tesco’s interim results trading statement said the supermarket was consistently the cheapest of the “full-line grocers” across the half year, with its “powerful combination” of Aldi Price Match on more than 650 lines, more than a thousand Low Everyday Prices locked to January 2024 and exclusive Clubcard Prices deals.
Tesco said it had cut prices on about 2,500 products by the end of the half of the financial year, with average saving of about 12%.
‘Affordable Christmas by shopping at Tesco’
Ken Murphy, Tesco chief executive, said: “We know how challenging it is for many households across the country, as they continue to grapple with ongoing cost-of-living pressures. We are committed to doing everything we can to drive down food bills and Tesco is now consistently the cheapest full-line grocer.
“Our investments in value, and in improving more than 1,100 own brand products from pasta to fresh fish, are helping us to offer outstanding quality at great prices, all underpinned by market-leading availability. Customers are responding well, contributing to market share gains in store and online. We’re seeing the results at both ends of the basket, with strong growth in our Finest range as shoppers look to save by treating themselves at home, voting with their feet as they switch from premium retailers to Tesco.”
Murphy added: “This relentless focus on customers, combined with significant cost reductions from our Save to Invest programme, has driven our strong performance in the first half of the year. Food inflation fell across the half and while external pressures remain, we expect that it will continue to do so in the second half of the year. We are in a strong position to keep investing for customers, and will continue to lower prices wherever we can – doing everything in our power to make sure customers can have a fantastic, affordable Christmas by shopping at Tesco.”
‘Raking in billions’
But Mohsin Rashid, CEO of data firm Zipzero, said it was “somewhat galling” to hear Tesco’s CEO reassure shoppers about falling food price inflation while the supermarket raked in billions of pounds in profit.
He said: “Over the past two years, consumers have been forced to change their lifestyles, eating habits and financial priorities just so they can afford their weekly food shop, and every penny of supermarket profit has been pinched from the pocket of someone making do with less.
“Tesco say they are doing ‘everything they can’ to drive down food bills, but the fact of the matter is readily apparent in their profits. Clearly, they could do much more. Food inflation and the cost-of-living crisis have been a bonanza for retailers, and being told by those same supermarkets that have profited that they are working to support consumers is difficult to stomach.
“Consumers don’t need empty platitudes – they need practical means of reducing their costs of living. UK consumers deserve meaningful price cuts across every aisle and even if food price inflation does ease, supermarkets need to strive to do much more to help consumers in the months to come, by handing back some of the excessive profits they have been able to generate.”
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