Tesco upheld its annual guidance as it posted healthy first-quarter sales growth, driven partly by more shoppers buying its Finest product range and using its rapid online delivery service, Whoosh.
Britain’s largest supermarket chain said sales from continuing operations, excluding fuel, increased by 4.5 per cent at constant currency levels to £15.6billion in the 13 weeks ending 25 May.
Like-for-like retail revenues rose by 3.4 per cent following a strong result across the British Isles, where the group is enjoying growing volumes and market share.
Good result: Tesco revealed sales from continuing operations, excluding fuel, increased by 4.5 per cent at constant currency levels to £15.6bn in the 13 weeks ending 25 May
In the UK, the firm’s food sales expanded by 5 per cent thanks to solid demand for fresh produce, while non-food orders were boosted by higher clothing purchases.
It also benefited from an 8.9 per cent rise in online turnover, helped by the popularity of its rapid delivery service, Whoosh, and a 12.5 per cent growth in sales of its Tesco Finest premium range despite cost-of-living pressures.
Following the robust performance, the company still anticipates full-year adjusted operating profits of at least £2.8billion from its retail operations and approximately £80million from its Tesco Bank business.
Alongside this, it believes retail free cash flow generation will be within its guidance range of £1.4billion to £1.8billion.
Ken Murphy, Tesco’s chief executive, said: ‘We’ve continued to build momentum in the business, with strong volume growth across the UK, Republic of Ireland and Central Europe supported by easing inflation.
‘We continue to be the cheapest full-line grocer and are the most competitive we’ve ever been, with our value, product quality and service driving better brand perception and customer satisfaction.’
Murphy received a compensation package of nearly £10million for last year, more than double the £4.4million awarded to him the previous year.
The amount received blowback from the Unite union and some shareholder groups, partly because it is 431 times the £23,010 an average Tesco worker earns annually.
Investors will vote on the pay award at Tesco’s annual general meeting on Friday, which will be held at its headquarters in Welwyn Garden City, Hertfordshire.
In the last financial year, Tesco’s pre-tax profits skyrocketed 159 per cent to £2.3billion, its best result for over a decade, while turnover rose by 7.4 per cent to around £61.5billion.
Since then, the firm’s market share has continued to grow, hitting 27.6 per cent in May, according to industry research provider Kantar.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Tesco has done exceptionally well to grow market share, given rising competition.
‘Its full-line offering sets it apart from the likes of Aldi, and its product proposition puts it ahead of other big names.
‘Tesco’s enormous scale means it operates more like a utility in some respects – everyone needs to put dinner on the table, and an increasing number of customers are buying that at a Tesco.’
Tesco shares were 1.6 per cent up at 307.3p on Friday morning, making them one of the FTSE 100 Index’s top risers.
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