Tesco Lifts Views After Cost Cutting, Easing Inflation Boosts Performance -- Update
04 Outubro 2023 - 5:46AM
Dow Jones News
By Michael Susin
Tesco upgraded its guidance on retail earnings after significant
cost reductions resulted in a strong performance in the first half,
supported by easing inflation, improved volumes and sales
trends.
The U.K. grocer expects retail adjusted operating profit--the
company's preferred metric, which strips one-off items--for fiscal
2024 between 2.6 billion pounds and 2.7 billion pounds ($3.14
billion-$3.26 billion), up from previous guidance of GBP2.49
billion.
The free cash flow target was raised to between GBP1.8 billion
and GBP2.0 billion for the year, compared with a previous range of
GBP1.4 billion-GBP1.8 billion.
Tesco's upgraded guidance comes amid a continued slowdown in
food price inflation as costs pressures ease. The latest report by
NielsenIQ and the British Retail Consortium showed that prices in
September fell for the fifth consecutive month.
For the six months ended Aug. 26, Tesco reported pretax profit
of GBP1.22 billion, compared with GBP396 million the same period a
year earlier. Revenue rose to GBP34.15 billion from GBP32.52
billion.
Retail sales on a like-for-like basis were up 7.8% as inflation
fell in the period, with volume and sales mix trends ahead of
expectations.
"Food inflation fell across the half and while external
pressures remain, we expect that it will continue to do so in the
second half of the year," Chief Executive Ken Murphy said
Wednesday.
Tesco said it had cut prices on around 2,500 products by the end
of the first half, bringing average savings for consumers of around
12%, and that it is improving its own-branded products line.
"Customers are responding well, contributing to market share
gains in store and online. We're seeing the results at both ends of
the basket, with strong growth in our Finest range as shoppers look
to save by treating themselves at home, voting with their feet as
they switch from premium retailers to Tesco," Murphy said.
The board declared an interim dividend of 3.85 pence a share,
same as a year earlier.
Shares at 0815 GMT were up 7.3 pence, or 2.8%, at 266.9
pence.
Write to Michael Susin at michael.susin@wsj.com
(END) Dow Jones Newswires
October 04, 2023 04:31 ET (08:31 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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