Tesco says it has recorded a “strong” rise in retail sales in the latest quarter – buoyed by easing inflation.
The UK’s largest supermarket also said its market share was growing at its fastest rate than at any time in the last two years.
The grocery giant reported sales grew across the group, including Ireland, by 3.4% to £15.3bn in the 13 weeks to 25 May, compared with the same period last year.
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Its performance was even stronger at home – its UK market seeing a rise of 4.6% to £11.4bn.
This came on the back of a 5% increase in food sales, with high demand for fresh produce helping to drive higher sales volumes.
Sales of Tesco Finest products also grew “strongly” amid demand by shoppers for premium products.
The firm’s market share rose by more than 50 basis points to 27.6% in the 12 weeks to 12 May year on year, according to market researcher Kantar.
Tesco highlighted its strategy of matching the prices of discounter Aldi on key items and its clubcard loyalty scheme, which provides lower prices for members.
These initiatives are being funded by reducing business costs, with a further £500m of savings targeted for 2024/25.
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With sales trends in line with expectations, Tesco said it expects to deliver an operating profit of at least £2.8bn for the current financial year, holding its target set in April.
‘Strong volume growth’
Tesco chief executive Ken Murphy said: “We’ve continued to build momentum in the business, with strong volume growth across the UK, Republic of Ireland and central Europe supported by easing inflation.”
He added: “Our market share reflects this, growing more than at any other time in the past two years, with customers switching to us from other retailers, shopping with us more often and with more in their baskets.”
The results announcement came ahead of the retailer’s annual general meeting, where Mr Murphy was expected to face scrutiny after receiving a £9.93m pay package for the past year.
It compared with a £4.44m total pay deal for the previous financial year and means the boss has been paid 431 times the wage of the average Tesco worker – £23,010.
Mr Murphy said: “I absolutely accept that I’m well paid.”
Following the trading update, Mr Murphy also said he was “not unduly worried” by the Labour Party’s plan to introduce a new package of workers’ rights if it wins next month’s election.
Tesco has about 270,000 UK employees, making it Britain’s biggest private sector employer.
Referring to the opposition’s new deal for working people, which includes banning zero hours contracts and ending “fire and rehire”, Mr Murphy said: “Many of the measures outlined in proposed legislation we’re already ahead of. We don’t have any minimum hour contracts, for example, in our business. So I’m not unduly worried.”
Workers’ rights
Mr Murphy said plans that protect the rights of workers “is a good thing”, but argued they also needed to bolster productivity, economic growth and jobs.
“We will of course support the government in achieving those three things. Getting that balance right is always the key,” he added.
Regardless of which party wins the election, Tesco wants “stability and consistency” because it would “allow businesses to plan and to invest”, he said.