Tesco has nudged profit forecasts higher following stronger than expected Christmas sales, crediting a focus on value for claiming its highest share in four years during the festive season.
The UK’s biggest grocery retailer reported a 2.7% rise in like-for-like sales for its UK and Ireland business during the six weeks to 8 January compared to the same period last year, when sales were boosted by stricter Covid-19 restrictions.
Festive sales also jumped by an impressive 8.8% on a two-year basis, compared to the same period pre-pandemic.
The growth came despite the “growing cost pressures and supply chain challenges”, with trading boosted as Brits chose to stay at home due to the spread of Omicron.
The group said the better-than-expected trading has put it on track to deliver full-year profits slightly above the guidance of between £2.5 billion and £2.6 billion – its second upgrade in less than four months.
Large stores and convenience outlets performed particularly well during the period, while online sales also remain significantly ahead of pre-Covid levels.
Tesco also highlighted that it had claimed its highest share of the home delivery market since the Covid pandemic began, taking an average 1.2 million orders per week.
“We are delighted that we were able to help our customers have a great Christmas,” commented Tesco’s chief executive Ken Murphy.
“Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range.
“This put us in a strong position to meet customers’ needs as, once again, Covid-19 led to a greater focus on celebrating at home. As a result, we outperformed the market, growing market share and strengthening our value position.”
But the group also warned of rising food prices, with costs almost doubling to 5%. Customers have already seen a 1% increase over the past 19 weeks.
Mr Murphy added: “It’s possible we’ll see some further inflation on food, but we’ll do our very best to minimise the impact on customers.”
Tesco’s results follow a week of positive news for major retailers, following strong performances from other grocery and food brands, including Sainsbury’s and M&S.