Tesco to reveal stronger sales amid price war fears
Tesco shareholders will be hoping for reassurance over continued sales growth and robust profits next week amid the prospect of an intensifying grocery price war.
Earlier this year, shares in the UK’s largest supermarket group struck their highest level for over a decade as it continued to strengthen its position in the grocery sector.
In its most recent update, Tesco cheered data showing it had reported its highest market share for almost nine years, with a 28.5 per cent share of the sector’s sales.
The chain revealed UK and Ireland like-for-like sales, excluding fuel and VAT, up 3.7 per cent over the six weeks to January 4 and record trading in the week before Christmas.
Aarin Chiekrie, equity analyst, Hargreaves Lansdown said: “Growth in the UK and Europe helped to offset declines in its wholesale business, Booker.
“It’s a competitive space but its improving proposition saw Tesco record its highest market share since 2016.
“Investors will be keen to see this trend continue when it reports full-year results next week.”
It comes after returning Asda boss Allan Leighton laid out plans from the Leeds-based firm to reclaim market share by aggressively focusing on lower prices in order to win back shoppers.
Initially, Tesco and Sainsbury’s saw billions of pounds wiped off their stock market value before recovering some ground.
Investors will therefore be keen to hear more about Tesco’s pricing and profit strategy over the coming year when it updates the market with its annual results on Thursday, April 10.
The group has focused on pricing and delivering value for customers under the leadership of current boss Ken Murphy, particularly through its Clubcard loyalty programme and Aldi price match scheme.
It has continued to boost profits despite heavy investment into its pricing strategy.
On Thursday, the company is expected to report another increase in profits, with analysts forecasting a group adjusted operating profit of £3.07bn for the year to February.
It recorded profits of £2.83bn for the previous year.
Industry experts have also suggested that it will reveal revenues of around £70 billion for the year, compared with £61.5bn a year earlier, on the back of stronger volumes from shoppers.
Shareholders will also be keen to see how wider consumer sentiment is faring given a backdrop of rising household bills and an uncertain global economic environment.
By Henry Saker-Clark, PA Deputy Business Editor