Equities Update: Tesco…

Tesco’s profits surge as the UK’s biggest supermarket increases market share

Mark Crouch, market analyst at investment platform eToro, says: “Tesco’s excellent 2024 performance is reflected in this morning’s results as the UK’s largest supermarket reported a further increase in profits as their shares surged to an eleven-year high.  

“Throughout a period in which supermarkets have faced a whole host of headwinds, from a global pandemic to high inflation and a cost-of-living crisis, Tesco has not only maintained their market share but increased it to the highest point in almost three years. And despite the rise of budget supermarket chains, who have managed to wrestle away market share from other big names in the sector, Tesco has not been one of them.

“There are several reasons for this. Food sales growth has been an area where Tesco is rarely beaten, offering a larger and wider variety of products to their customers. Price-matching and Tesco’s Club Card loyalty program, which has grown to over 22 million members and counting, have also been a resounding success.

“As Tesco looks to the future, a stronger focus will be given to growing their online shopping participation. With the implementation of AI, the supermarket giant plans on using invaluable data from Club Card users to help customers cut costs, reduce waste and create an overall more personalised shopping experience.

“While the economic challenges on the horizon may be no less demanding, Tesco has demonstrated time and again they have what it takes to stay one step ahead of their rivals.”

Garry White, Chief Investment Commentator at Charles Stanley: “It’s been a terrific first half for Tesco and this has allowed its conservative management to upgrade guidance for full-year adjusted operating profit to the City. This increase in guidance comes despite continuing investment in price, with average price cuts of 9% on 2,850 products. But it’s not only the value proposition that’s attracting customers. Its ‘Finest’ range saw volume growth of almost 15%, so the higher, quality end is attractive too. Tesco’s market share is now at the highest level since January 2022 and the supermarket is in a strong position to continue to grab market share, maintaining its position as Britain’s premier grocer.”