Tesco has reported a 7.8% increase in like-for-like sales in the first half of its financial year, as it reported volume and sales mix that was 'ahead of expectations'.
Like-for-like sales in its UK & ROI business rose 8.4%, with the UK up 8.7%, Republic of Ireland up 6.9% and Booker up 7.5%.
On a reported basis, Tesco said sales rose 8.4% at constant exchange rates to £30.75 billion (€35.45 billion) in the period, while adjusted operating profit was up 13.9% to £1.48 billion (€1.71 billion).
"Food inflation fell across the half and while external pressures remain, we expect that it will continue to do so in the second half of the year," commented Ken Murphy, chief executive.
"We are in a strong position to keep investing for customers, and will continue to lower prices wherever we can – doing everything in our power to make sure customers can have a fantastic, affordable Christmas by shopping at Tesco.”
In its Central Europe business, meanwhile, like-for-like sales rose by 0.9%, reflecting the strength of the previous year's sales, Tesco said, along with volume contractions due to sustained high inflation. Adjusted operating profit in Central Europe was down 41.8%.
In a media call with journalists, Murphy admitted that Tesco is finding business "much more challenging" in Hungary at present, although Czechia and Slovakia are performing well.
As inflation has normalised, so Tesco has rolled out a range of price cuts, with prices dropping on around 2,500 SKUs by the end of the half, at an average rate of 12%, the retailer noted.
In addition, it has 'locked' the price of more than a thousand SKUs to January 2024, and implemented 'Clubcard Prices' on more than 8,000 SKUs.
Looking ahead to the remainder of the year, Tesco said that it now expects to report between £2.6 billion (€3 billion) and £2.7 billion (€3.1 billion) in retail adjusted operating profit for the 2023/24 financial year, as well as retail free cash flow of £1.8 billion (€2.1 billion) and £2.0 billion (€2.3 billion), ahead of its medium-term guidance range.
"We are committed to doing everything we can to drive down food bills and Tesco is now consistently the cheapest full-line grocer," added Murphy.
The group opened 33 stores across its network in the half, including 16 Express and 11 One Stop outlets in the UK, one superstore in Ireland, and five new stores in Central Europe.