Tesco raises outlook and will buyback shares

Tesco raised its full-year outlook on Wednesday (October 6), after a strong first-half performance.

The company reported a near 17% rise in retail profit to about $1.88 billion – beating analyst expectations.

First-half group sales rose 2.6% to $37 billion, despite labour and supply chain disruption.

Chief Executive Ken Murphy said the supermarket chain had outperformed the market.

He added that the depth of its supplier partnerships had been shown to be a key asset.

The strong first-half led Tesco to raise its forecast for full-year retail operating profit to as much as $3.54 billion.

Analysts say a huge online business has helped.

They also credited its pricing strategy, which matches the likes of discounter Aldi on around 650 products, and a loyalty scheme that offers lower prices to members.

Tesco said its performance had allowed it to reduce net debt by $2.3 billion since February.

The firm plans on using the money for a share buyback.

One shadow looms though.

Last month, company chairman John Allan said last month that supply chain disruption could see food prices rise by 5% this winter.

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