3 October 2024
If you are covering Tesco’s H1 results, please see comments below from Matt Dorset, equity analyst at Quilter Cheviot:
“Tesco's H1 results have exceeded expectations, showcasing solid performance across the board. Group retail sales grew by 2.9% on a like-for-like basis, driven by volume growth and an increase in market share in the UK, which now stands at 27.8%, the highest since January 2022.
“The UK and Ireland divisions performed strongly, with sales growth of 4% and 4.7% respectively. However, the Booker wholesale division saw a 2% decline in like-for-like sales, reflecting ongoing challenges in the tobacco market and some weakness in the fast-food sector.
“This robust performance translated into a 15.8% increase in operating profit and a 24% rise in EPS, both figures surpassing consensus estimates. Tesco's commitment to maintaining strong consumer relationships is evident in their recent price cuts on over 860 products, which have contributed to improved customer satisfaction. Home and clothing also reflected this with sales up 1.6% on a like-for-like basis, supported by a strong clothing performance, with Tesco continuing to outperform the broader store-based clothing market.
“In light of these strong results, Tesco has raised its guidance, now expecting to deliver around £2.9bn in retail adjusted operating profit for the 2024/25 financial year, up from the previous forecast of at least £2.8bn. Currently, Tesco trades at 12.4 times its 2025 earnings and offers a 3.4% dividend yield.”
