Tesco, the UK’s largest supermarket, has announced its first quarter trading statement:
- Like-for-like sales (LFL) excluding fuel increased by 3.4%
- UK retail business grew LFL sales by 4.6% with food up 5.0% and non-food sales up 0.7%, driven by strong clothing sales
- Full year guidance unchanged – Tesco continues to forecast retail adjusted operating profit of at least £2.8 billion and retail free cash flow of £1.4 to £1.8 billion
Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented:
“This is another solid trading update from Tesco with further volume growth and market share gains in the first quarter. The group is more than holding its own against the German discounters and carries good momentum into the upcoming summer of sport.
With food prices moderating, the UK supermarkets can no longer rely on inflation to boost sales. This means volume growth is critical and Tesco is delivering just that. The group has worked hard for several years to lower prices, improve the quality of its ranges and bolster its brand perception. This is clearly resonating with the UK consumer.
Lower food inflation should also ease pressure on consumers, whose finances have been squeezed from all angles by rising prices, no more so than for the weekly shop. With interest rates likely to be cut sooner rather than later, this could provide an additional boost to UK consumer sentiment.
Tesco cannot afford to rest on its laurels. Aldi and Lidl continue to expand at a rate of knots, and the UK economy is not out of the woods, with an election looming. However, Tesco is in the strongest position it’s been for many years and will look forward to the rest of the year with confidence.”
Wealth Club
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