Tesco chief executive Ken Murphy has said the supermarket’s formula for success has been having the “best value in the market” as it looks to battle an increasingly competitive environment.

The supermarket giant, which today posted a 10.6% rise in profits over the last year to £3.13bn, has warned of lower profits in the year ahead. It predicts profits of between £2.7bn and £3bn for the period. Tesco said the guidance would provide it with the “flexibility and firepower to be able to respond to current market conditions”.

Murphy has said this firepower will see the retailer go beyond just investing in lowering prices.

He explained: “Our formula for success has been the best value in the market, which is a combination of really keen pricing, through price match, through Clubcard prices and everyday low prices, coupled with great quality. That’s a combination of making sure the intrinsic quality of all your produce is as good as it can be, and the innovation we put into our products.

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“That’s wrapped in the shopping experience and so making sure that we’ve got the highest standards of availability and service in all the channels we serve. When we talk about firepower, we mean across the board, because we know it’s that combination that keeps customers coming back.”

Despite the lower profits expected in the year ahead, Murphy added that Tesco is “coming into this new year with really strong momentum”.

Tesco’s market share hit its highest level in nine years in 2024 – up 0.67% to 28.3%, with share gains for 21 consecutive four-week periods.

“The announcement we’re making today is from a position of strength, and really what we’re saying is that whatever the competitive environment and whatever comes our way, we’re capable of dealing with it,” he said.