Tesco set for bigger profits after bumper Christmas sales

The retailer said it has cut “nearly 2,700 prices” as part of this strategy to attract customers who have faced a surge in the cost of living.

Tesco said like-for-like retail sales across the group rose by 6 per cent over the six weeks to January 2024, compared with the same period a year earlier.

In the UK, sales across it stores grew by 6.8 per cent over the Christmas period, with the company reporting a sharp rise in demand for its Finest premium range of food and drink products.

It came as the company also reported that like-for-like retail sales grew by 6.6 per cent over the previous 13 weeks, the quarter to November 25, as it was boosted by strong growth in its UK and Ireland shops.

Tesco said it now expects a retail-adjusted operating profit of £2.75bn for the year, up from a previous range of between £2.6bn and £2.7bn.

Chief executive Ken Murphy said: “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.

“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.”

Victoria Scholar, Head of Investment, interactive investor said: “Tesco has raised its earnings outlook for the second time in recent months.

"Tesco’s Clubcard sales penetration and its low-price guarantee helped to drive sales despite pressures from the cost-of-living crisis.

"Its Aldi Price Match scheme and continued price cuts mean that customers know they are getting the cheapest prices in Tesco, helping to continue to attract shoppers to its stores.

"Tesco’s finest range also helped to drive sales over the festive season with a record Christmas sales week.

"On inflation, Tesco said it is inflating less than all key competitors, claiming to be the cheapest full-line grocer for over 14 months.

“Shares in Tesco are up today and have gained more than 20 per cent over the past 12 months.”

Some of the biggest names in retailing will be revealing details of their Christmas trading performance over the next few weeks.

These figures will be studied closely by City analysts because they will provide an insight into consumer sentiment during a period of inflationary pressures and a cost of living crisis.