REG - Tesco PLC - Q1 Trading Statement 2024/25

TescoAnnouncement

14/06/2024 07:00

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RNS Number : 4034S  Tesco PLC  14 June 2024

0

Q1 Trading Statement 2024/25

 

CONTINUED MOMENTUM - GAINING MARKET SHARE & GROWING VOLUMES.

Sales performance (exc. VAT, exc. fuel) for the 13 weeks ended 25 May 2024:

                 Sales (£m)   LFL sales change
 UK & ROI        14,330       3.6%
   UK            11,368       4.6%
   ROI           731          4.4%
   Booker        2,231        (1.3)%
 Central Europe  975          0.6%
 Retail          15,305       3.4%

Ken Murphy, Chief Executive:

"We've continued to build momentum in the business, with strong volume growth
across the UK, Republic of Ireland and Central Europe supported by easing
inflation.  We continue to be the cheapest full-line grocer and are the most
competitive we've ever been, with our value, product quality and service
driving better brand perception and customer satisfaction.  Our market share
reflects this, growing more than at any other time in the past two years, with
customers switching to us from other retailers, shopping with us more often
and with more in their baskets.

We are looking forward to helping our customers celebrate a great summer of
sport.  We recently launched more than 100 new and exciting own brand
products, including our Finest Dine In summer menu, based on classic pub
dishes, and improved our Picnic & Deli, BBQ and Sweet Treat ranges.
Tesco Finest growth was particularly strong in the quarter as customer
perception of the quality of our products continues to improve.

Following another strong quarter, we're pleased to reiterate our guidance for
the full year, with sales trends in line with our expectations and the
business well-positioned for the months ahead."

 

Performance highlights(1).

UK: Strong market share performance and strengthening volumes

 •    Market share growing ahead of all key competitors, up +52bps to 27.6%(2),
      supported by 15 consecutive periods of positive switching gains(3)
 •    Food sales up +5.0%, including strong volume growth across the quarter,
      particularly in fresh food; non-food sales up +0.7%, driven by strong growth
      in clothing
 •    Cheapest of the full-line grocers for 19 consecutive periods(4) through
      powerful combination of Aldi Price Match on c.700 lines, Low Everyday Prices,
      with >1,000 prices locked, and Clubcard Prices
 •    Growth in all channels; online sales up +8.9%, driven by volume growth and
      strong contribution from Whoosh
 •    Finest sales continue to grow strongly, up +12.5%; net switching gains from
      premium retailers for 22 periods(3)
 •    Ongoing investment in colleague hours supporting further improvement in brand
      perception, customer satisfaction(5) and availability, which is up +1.5ppts
      year-on-year to 95.9%

ROI: Fourth consecutive quarter of volume growth drives further market share
gains

 •    Continued growth in market share, up +59bps(6), with 18 consecutive periods of
      positive switching gains(7)
 •    Growth in all channels; food sales up +5.1%, with fresh volumes particularly
      strong, supported by investment in the fresh proposition

Booker: Continued underlying growth in core retail & catering following
exceptional performance last year

 •    Core retail(*) sales up +1.0%, with further improvements in availability and
      204 net new retail partners
 •    Core catering(*) sales up +2.2%, with new Fareham DC supporting increased
      capacity and volumes
 •    Overall sales decline of (1.3)% reflects continued tobacco market decline and
      weakness in parts of the fast-food market serviced by Best Food Logistics;
      performance also reflects strength of prior year comparatives
 •    Recent acquisition of Venus Wine and Spirit Merchants PLC strengthens on-trade
      premium drinks offer

CE: Sales growth driven by strengthening food volumes

 •    Positive customer response to sustained price investment supporting growing
      food volumes, up +2.8%
 •    Customer NPS growing ahead of the market in Hungary, Slovakia and Czech
      Republic(8)

* Booker 'Core retail' refers to retail excluding tobacco sales; 'Core
catering' refers to catering sales excluding Best Food Logistics

 

Contacts.

 Investor Relations:  Chris Griffith                             01707 940 900
 Media:               Christine Heffernan                        0330 6780 639
                      Teneo                                      0207 4203 143

 

A call for investors and analysts will be held today at 09:00am.  A link will
be available on our website at www.tescoplc.com/investors.  A transcript and
playback facility will also be made available after the call.

 

We will report our Interim Results on Thursday 3 October 2024.

 

Additional Q1 sales detail (exc. VAT, exc. fuel) (on a continuing operations
basis).

                 Sales (£m)   Total sales change  Total sales change

                              (constant rates)    (actual rates)
 UK & ROI        14,330       4.1%                3.9%
   UK            11,368       5.3%                5.3%
   ROI           731          5.1%                2.4%
   Booker        2,231        (2.0)%              (2.0)%
 Central Europe  975          0.9%                (5.0)%
 Retail          15,305       3.8%                3.3%
 Tesco Bank      271          59.9%               59.9%
 Group           15,576       4.5%                3.9%

The results of our existing banking operations (credit cards, loans and
savings) have been treated as discontinued following our 9 February 2024
announcement of the proposed sale to Barclays, with comparatives restated. As
such, Tesco Bank sales included in continuing operations above refer only to
the retained Tesco Bank business i.e. insurance and money services. Total
Tesco Bank sales in the first quarter were £469m, which grew by 40.2%. We
remain on track to complete the transaction by the end of this calendar year.
 

 

UK Fuel.

               Sales (£m)   LFL sales change
 UK exc. fuel  11,368       4.6%
 Fuel          1,643        (4.4)%
 UK revenue    13,011       3.4%

 

Booker sales breakdown.

                          LFL sales change
 Retail (ex. tobacco)     1.0%
 Catering* (ex. tobacco)  2.2%
 Tobacco                  (5.2)%
 Best Food Logistics      (6.8)%
 Total Booker             (1.3)%

* Includes small businesses sales

 

Guidance (as set out in our Preliminary Results published on 10 April 2024).

For the 2024/25 financial year, we expect retail adjusted operating profit of
at least £2.8bn. In addition, we expect total adjusted operating profit from
the retained Tesco Bank business of around £80m, which includes a part-year
amount of partnership income, based on the completion of the transaction
towards the end of this calendar year.  We expect to generate retail free
cash flow within our guidance range of £1.4bn to £1.8bn.

Notes.

1.     Sales growth percentages refer to like-for-like change unless
otherwise stated

2.     UK Kantar Tesco year-on-year change in market share of Grocers'
Total Till Roll for 12 weeks ended 12 May 2024

3.     UK Kantar net switching gains 12 week ending rolling basis to 12
May 2024. 'Premium retailers' comprise M&S and Waitrose

4.     UK Price Index, an internal measure calculated using the retail
selling price of each item on a per unit or unit of measure basis. Competitor
retail selling prices are collected weekly by a third party. The price index
includes price cut promotions and is weighted by sales to reflect customer
importance. 'Full-line grocers' comprise Tesco, Sainsbury's, Asda and
Morrisons

5.     Brand perception and customer satisfaction based on year-on-year
changes in YouGov BrandIndex scores for the 12 weeks ended 26 May 2024

6.     ROI Kantar Tesco year-on-year change in market share of Total
Grocery market for 12 weeks ended 12 May 2024

7.     ROI Kantar net switching gains 12 weeks ending rolling basis to 12
May 2024

8.     BASIS Global Brand Tracker. 3 period rolling data. Responses to the
question: "How likely is it that you would recommend the following company to
a friend or colleague?"

 

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