Tesco lifts profit outlook after lowered prices boosts trading

Tesco has raised its annual earnings expectations as it said good weather and efforts to keep its prices low in a competitive market had boosted trading.

The UK’s biggest supermarket reported an increase in sales over the first half of the year.

UK sales grew by 4.9% compared like-for-like with the same period last year, it said.

The group’s adjusted operating profit also rose by 1.6% to £1.67 billion for the half-year.

Tesco said it now expects underlying earnings for the full year of between £2.9 billion and £3.1 billion, up from its previous guidance range of between £2.7 billion and £3 billion.

Warmer weather and shoppers cashing in on lower prices helped offset the cost of the supermarket’s investments into its ranges and elevated business costs including higher taxes.

Tesco’s chief executive Ken Murphy said: “The steps we have taken to keep prices down for customers have improved our price position relative to the market.

“Competitive intensity remains high and with continued pressure on household budgets,, we remain committed to ensuring customers get the best possible value by shopping at Tesco.”