Tesco sales rise as shoppers switch from rival grocers

TESCO said shoppers are spending more in stores and online as food price inflation eases, with its market share growing the most in two years.

Comparable sales at Britain’s largest grocer rose 4.6 per cent in the quarter through May 25. Tesco expects to hit a retail operating profit of at least £2.8 billion (S$4.8 billion) this fiscal year, though it kept its forecast for the year unchanged on Friday (Jun 14).

Tesco said it’s gaining market share by attracting customers from rivals including Marks & Spencer and Waitrose, along with matching prices with discounter Aldi. 

Easing inflation has also helped sales volumes with Tesco continuing to be the cheapest of the major grocers in Britain, according to chief executive officer Ken Murphy. Fresh produce and clothing items were among the best-selling products during the period. 

“Our sense is that there is a gentle ongoing improvement in customer sentiment,” he said on a call with journalists. He added that recent increases in the national minimum wage is good for its shoppers and “our base case for the rest of the year is very low single-digit inflation”.

Sales at Tesco’s wholesale business Booker, which supplies food to restaurants, convenience retailers and catering companies, fell 1.3 per cent partly due to falling sales of tobacco.  

“Overall we think this is a strong and confirmatory set of results from Tesco that they continue to power ahead and be strong in the UK market,” said William Woods, an analyst at Bernstein. BLOOMBERG