Tesco, the UK’s largest supermarket, has hiked its forecasts for full year profits and kicked off a share buyback programme.
Stronger than expected demand for the food retailer’s products prompted it to raise expectations for retail operating profits to between £2.5bn and £2.6bn.
Ken Murphy, chief executive of Tesco, said: “We’ve had a strong six months; sales and profit have grown ahead of expectations, and we’ve outperformed the market.”
Tesco will purchase £500m of shares, the first tranche of buybacks, from investors by no later than October next year, the firm said.
Operating profit for the overall business soared over 40 per cent in the first six months of the year, scaling to £1.45bn.
Operating profit in the retail business climbed 16.3 per cent to £1.38bn, up from £1.19bn.
The supermarket weathered the supply chain disruption infiltrating other businesses by “leverag[ing] our strong supplier relationships and distribution capability to maintain good levels of availability for customers, contributing to our market outperformance,” it said.
The Euro 2020 football tournament and Brits staycationing amid ongoing travel restrictions lifted sales, Tesco said.
“With various different challenges currently affecting the industry, the resilience of our supply chain and the depth of our supplier partnerships has once again been shown to be a key asset,” Murphy said.
“Our strong performance to date and our confidence in our ability to generate cash in the coming years has enabled us to announce the start of a buyback programme that will balance the maintenance of a strong capital structure with returning surplus cash.”
Tesco was the best performer on the FTSE 100 this morning, rising 4.74 per cent.