Tesco set for profit rise as sales continue to grow at supermarket giant
Shareholders will be looking for a positive trading outlook when it updates the market on Wednesday April 10.
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Your support makes all the difference.Tesco is expected to reveal higher profits as sales have continued to grow despite a slowdown in food price inflation.
Investors have been in positive spirits in recent months, particularly after Tesco upgraded its profit targets in a post-Christmas trading update.
Its shares struck their highest level for almost two years as a result, with the retail giant’s investment in pricing helping to maintain growth despite competition from fast-growing discount rivals.
Shareholders in the business will be hopeful that this can translate to another positive trading outlook when it updates the market on Wednesday April 10.
Tesco’s full-year results are expected to show adjusted operating profits of about £2.9 billion for the year to February, according to a consensus of analysts.
That is compared with profits of £2.63 billion for the previous year.
Meanwhile, group revenues, excluding VAT, are expected to rise to £68.8 billion for the year, from £65.7 billion.
Over the past two years, revenue growth has been supported by soaring food and drink price inflation.
However, this has slowed significantly more recently as commodity and energy cost reductions feed through supply chains, with the British Retail Consortium revealing grocery price inflation dropped to 1.3% last month.
But analysts have suggested this could provide a further opportunity for Tesco to grow its volumes and share of the grocery market by continuing its ambitious, price-cutting programme.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Investors will be looking for further proof of volume uplifts as price cuts continue as inflation tempers.
“With that in mind, it will be the outlook statement that holds the most weight where sentiment is concerned.”
In its previous update in January, Tesco bosses said it saw strong growth over the Christmas, with sales up 6.8% over the key trading period.
Jefferies analyst James Grzinic said the supermarket giant “should confirm another impressive year” after industry data from Kantar showed Tesco continued to improve its market share over the past year.