Tesco has raised its profit outlook for the second time in four months as it reported a rise in Christmas sales despite a tough comparative with 2020 when spending was boosted by a COVID-19 lockdown.
The group said UK like-for-like sales rose 0.2% year-on-year in its third quarter to November 27 year-on-year and were up 0.3% over the six weeks to Jan. 8.
Tesco forecast a full-year 2021-22 retail operating "slightly above" the top-end of its previous £2.5 billion to £2.6 billion range.
"“We are delighted that we were able to help our customers have a great Christmas," commented Ken Murphy, Tesco chief executive. "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."
Bullish Performance From Supermarkets
Tesco's profit upgrade follows one from rival Sainsbury's on Wednesday and bullish updates this week from the UK arms of German discounters Aldi and Lidl.
UK supermarkets faced tough comparisons against Christmas 2020 when a lockdown meant food and drink sales boomed.
While restrictions for Christmas 2021 were less severe, supermarkets still benefited from consumer nervousness over the spread of the Omicron variant which kept them away from bars and restaurants.
Tesco, which has a near 28% share of Britain's grocery market, said third-quarter UK like-for-like sales were up 6.9% against the same period in 2019-20, before the pandemic impacted trading. Sales over the six week Christmas period were up 8.8% on the same basis.
The group said it outperformed the market and grew market share.
Tesco forecast full-year operating profit for its bank to be between 160 million pounds and 200 million pounds, due to the effect of more favourable economic forecasts on its provision for expected credit losses.
News by Reuters, edited by ESM. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.