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Tesco, the UK’s largest supermarket, expects profits to continue to rise this year as it attracts more shoppers to its stores and consumer confidence improves.
The FTSE 100 company reported a 7.2% rise in sales for the year to February to £61.5 billion, as inflationary pressures “ebbed substantially”, while adjusted retail operating profit – which excludes Tesco Bank results – rose 10.9% to £2.76. billion. The company expects it to rise to at least £2.8 billion this year.
Pre-tax profit jumped from £882 million to £2.3 billion. The company also announced plans to buy back £1 billion of shares over the next 12 months following the sale of its banking business to Barclays.
Chief executive Ken Murphy said customers were choosing to shop more at Tesco, “which is reflected in the growing market share”, and its sales were boosted by its premium Finest range.
He added: “We have strong momentum in our business and are encouraged by signs of improving consumer confidence.”
Murphy said he expected food inflation to stabilize at low single-digit levels for the rest of the year, although inflation remained sticky in cocoa, potatoes and coffee. “I see that stabilization, that kind of low figure for the rest of the year is our planning assumption.”
Bernstein’s William Woods said: “Tesco delivered a good set of results as sticky UK food inflation and recovery in volumes support revenue growth.”