Tesco now expects full-year operating profits to exceed its established £2.5-2.6bn guidance, after stronger than expected sales over the festive period.
In its third quarter update, the supermarket giant revealed a 2.6 per cent increase in sales across UK and Ireland over a 19-week window through until Christmas, which was also 8.6 per cent up on pre-pandemic conditions in late 2019 over the same timeframe.
In the UK, Tesco now has the highest market share of both online and retail in four years, with online sales 58.7 per cent ahead of pre-COVID levels, with 1.2m orders per week.
This is the highest online share of the domestic market since the pandemic began.
Meanwhile, its expansion of its app continues apace, with 95 per cent promotional sales now on Clubcard Prices and 8.5m customers accessing Clubcard via the software.
In the Republic of Ireland, sales were hit over the third-quarter by pandemic restrictions, with a 2.1 per cent drop, but overall numbers remain well-ahead of like-for-like results from two years.
It recently announced its intention to acquire ten Joyce’s Supermarkets in Galway, as it looks to consolidate its foothold in the market.
Tesco’s Booker services, the wholesale operator and subsidiary it purchased in 2017 for £3.7bn, has also revealed a huge upswing in its trading, with a 17.5 per cent increase over the third quarter.
Both retail and catering sales are well ahead of pre-COVID with brands such as Premier, Londis and Budgens performing particularly strongly despite the impact of Omicron on the wider market.
Ken Murphy, chief executive said: “Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range. This put us in a strong position to meet customers’ needs as, once again, COVID-19 led to a greater focus on celebrating at home.”
Shares have dropped 1.74 per cent on the FTSE 100 following the results, however Chris Beauchamp, chief market analyst at IG Group, the trading platform, does not consider this much of a concern.
He said: “Tesco had been riding high into today’s statement, so they would have had to pull a huge rabbit out of their hat to avoid a decline in the shares. But we shouldn’t let today’s drop cast too much of a shadow over what was a solid statement all round. Sales up, a good Christmas, and market share thriving too. Overall it puts the UK’s supermarket titan in a solid place for the rest of the year, and even some additional share price losses in coming sessions should reflect some profit taking, rather than any disappointment around the numbers.”