Tesco has updated its profit guidance for the year, following what it said was a 'stronger trading performance than anticipated' in its third quarter and Christmas period.
The retailer now expects retail adjusted operating profit of around £2.75 billion (€3.2 billion) for the year, above its previous guidance range of £2.6 billion (€3.02 billion) to £2.7 billion (€3.14 billion), as well as retail free cash flow generation of around £2.0 billion (€2.32 billion).
In the third quarter, the group's UK & ROI business reported a 7.3% increase in like-for-like sales, while the six-week Christmas period was up 6.4% on a like-for-like basis.
On a reported basis, retail sales over the entire 19-week Q3 and Christmas period rose 6.7% (at constant rates) at group level, while UK & ROI was up 7.2%, Booker was up 2.9%, Central Europe saw a marginal sales gain of 0.2%, and Tesco Bank sales were up 32.8%.
Volume Growth
In a statement, the group said that it reported 'consistent volume growth' over the period, particularly in fresh food, while it also cut the prices of nearly 2,700 SKUs.
Its Tesco Finest private-label range saw sales up 16.7% in the UK over the period, including what it said was a 'record' Christmas week for the range.
Read More: Tesco Third-Quarter Results – What The Analysts Said
'Best Christmas Yet'
"The Tesco team has worked harder than ever to help customers celebrate this Christmas, with our strongest ever range of great value, fantastic quality food," commented Ken Murphy, chief executive.
"We stepped up our investment in service over the key festive period, with more colleagues on the shop floor, helping to deliver market-leading availability and making this our best Christmas yet."
In terms of UK channel growth over the period, the group's large stores reported a 7.5% increase in sales over the 19-week period, while convenience stores saw a 4.5% gain. Online was also a big winner, seeing 11.5% growth over the 19 weeks, and 12.3% growth in Q3 alone.
"Our powerful combination of great value, quality, availability and service means that we head into the New Year in great shape to keep delivering for customers," Murphy added.
