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Tesco Maintains Profit Outlook Despite the Cost-of-Living Crisis

Tesco, the largest retailer in Britain, has kept its full-year profit guidance after reporting stronger-than-expected Christmas sales.

Tesco store
Tesco store

The supermarket group, which has a 27.5% share of Britain's grocery market, said in a statement that UK like-for-like sales rose 4.3% in its third quarter to Nov. 26 and were up 7.2% in the six weeks to Jan. 7. The company stated it had "good momentum" going into 2023.

British Supermarkets See Strong Christmas Sales

British supermarkets have reported stronger-than-expected festive trading as families hosted larger Christmas gatherings after two years of pandemic restrictions and treated themselves at home rather than going out to save cash. Sainsbury's reported a 5.9% rise in underlying sales for its Christmas quarter, while discounters Aldi UK and Lidl GB have also reported bumper Christmas sales. Industry data has shown that the grocery sector delivered festive record sales, albeit growth was driven by price inflation rather than increased purchasing.

Tesco Absorbs Cost Inflation

Tesco, like Sainsbury's, is absorbing some of its cost inflation rather than passing it on to consumers. The group benefited from a scheme to price-match Aldi on over 600 products and the popularity of a 'Clubcard Prices' loyalty program that offers cheaper deals. The group maintained its forecast for 2022-23 retail adjusted operating profit of between 2.4 billion pounds and 2.5 billion pounds ($2.9-$3.0 billion), down from the 2.65 billion pounds made in 2021-22.