Tesco: ‘Encouraging signs inflation is starting to ease’ as quarterly revenue tops £14.8bn
Britain’s biggest supermarket Tesco has reported a nine per cent increase in UK sales, with its new chief executive saying there are “encouraging early signs that inflation is starting to ease”.
Tesco said it reported £13bn in sales across the UK and Republic of Ireland, up almost nine per cent on the previous quarter.
In the 13 weeks ending 27 May, in had £10bn in the UK alone, also up nine per cent, while its overall revenue was up eight per cent at £14.8bn.
Amid the cost of living crisis, Tesco said it has been trying to lower prices for customers, adding that it increased its Aldi Price Match to 700 products, and extended products on it clubcard range to 8,000 products.
This week the Office for National Statistics showed wages are rising at their fastest pace on record outside the pandemic, while last month it said inflation fell to 8.7 per cent.
“We are pleased with our performance in the first quarter, underpinned by our relentless focus on value”, said Ken Murphy, the new chief executive.
“Customers continue to recognise our leading combination of great value and quality in every part of their basket”.
He added that Tesco “are very conscious that many of our customers continue to face significant cost-of-living pressures and we have led the way in cutting prices on everyday essential items.
“There are encouraging early signs that inflation is starting to ease across the market and we will keep working tirelessly to ensure customers receive the best possible value at Tesco.”
“The ongoing effort and contribution from our colleagues is evident in the strength of our offer and I want to thank the entire team for everything they do. By focusing on our customers we have delivered a strong start to the year. We are well-positioned for the months ahead and are reiterating our guidance for the full year.”
Last month, Tesco was rocked by the resignation of John Allen, its chief executive, as he battles accusations of sexual misconduct – which he staunchly denies and is considering legal action.
This however comes after consumer goods champion Which? had reported Tesco to the Competition and Markets Authority (CMA) over claims that it does not display its clubcard prices clearly enough.
Which? said the grocer does not highlight the unit price of clubcard deals clearly enough to shoppers, making it hard for them to figure out the cheapest product, the BBC reported.
Last week, Tesco hit back saying it is “supportive of calls for greater clarity on the regulations in this area, in the interests of both businesses and consumers, and are actively looking at how we can make the way we display pricing even clearer for our customers. “
It also said it was “disappointed that Which? has chosen to make these ill-founded claims”.
In this morning’s results, it also said it remained Britain’s biggest supermarket with more than 27 per cent of market share, while its online sales had increased over eight per cent.
With millions of Brits tightening their wallets, it added that it saw a ninth consecutive period of switching gains, where shoppers switch from ‘premium’ retailers. It said this was backed by the launch of new ‘Finest’ products/
Tesco’s banking arm saw sales increase by almost 14 per cent, as customers looked to the supermarket to borrow money and for insurance.
It also said there was “higher credit card spending” as Brits try to cope with inflation and the cost of living by putting things on cards, and managing their money better.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Tesco is trading very well in the current environment, as consumers look for value in their shopping baskets. Cashflow remains strong and profits are expected to remain in line with where they were during a bumper 2022, with the bank and its wholesale offering Booker also making meaningful contributions to the group’s overall growth.
“Tesco is strengthening its grip on its position as the UK’s top supermarket and, with share buybacks continuing and management generally keeping the house tidy, it is in good shape – particularly with life likely getting tougher for its leveraged rivals, like Asda and Morrisons.”