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Tesco sees full-year profit at lower end of guidance

Tesco said that it would maintain its profit guidance for the year but expects profit to be towards the lower end due to “ongoing challenges in the market.”

he retailer now expects full-year adjusted operating profit of between £2.4bn and £2.5bn.

Tesco sales remained steady in the first half of the year, but the retailer recorded declines in profit amid post-pandemic normalisation and inflation.

Group sales rose 3.1pc to £28.2m in the period, while sales in its retail division declined by 10pc to £27.7bn

In the Republic of Ireland, where Tesco has 152 stores, sales dipped by 0.1pc year-on-year to £1.2bn.

However, sales in the first half of the year here were 12pc higher than the same period pre-pandemic, according to Tesco.

Group adjusted operating profit was £1.3bn for the six-month period. The UK and Republic of Ireland operating profit stood at £1.2bn, down 11.5pc year-on-year.

Tesco attributed the decline to the normalisation of shopping habits following the pandemic, as well as inflation and investment.

The retailer said this was particularly evident in Ireland, with restrictions in place for a longer period than in other markets.

Sales grew by 2.4pc here in the second quarter, which was due to a gradual increase in inflation.

Clubcard customers rose to 300,000 in Ireland in the period, with Tesco offering lower prices on some items for members of its loyalty scheme.

Clubcard sales penetration rose by 9.8 percentage points across Ireland in the first half.

Tesco has completed its acquisition of ten Joyce’s stores in June but will now sell one store as a condition of the transaction clearance.

“Customers are seeking out the quality and value of our own brand ranges as they work to make their money go further, whether they are switching from branded products, between categories or cutting back on eating out,” said Cork-born Tesco Group chief executive Ken Murphy.

He added that cost inflation is likely to remain “significant” in the second half.

“It is too early to predict how customers will adapt to ongoing changes in the market,” he said.

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