Tesco lifts FY guidance as interim sales, profit soar

Group sales including fuel grew 5.9% to £30.4bn in the 26 weeks to August 28 as pre-tax profit increased 107% to £1.1bn and adjusted operating profit rose by 40% to £1.45bn. Core retail sales were up 16.3% to £1.38bn and the interim dividend was held at 3.2p a share.

Profits were slightly dented by a £193m payout to shareholders related to a legal case linked to a 2014 accounting scandal at the company.

Tesco said it expected adjusted retail operating profit to be between £2.5bn and £2.6bn - a rise of £700m from previous guidance. It added that it was starting an share buyback with the first tranche of £500m to be bought within a year after a £1.7bn cut in net debt.

UK sales grew 1.2% with revenue at wholesale catering division Booker, which has been hit by the closure of pubs and restaurants during the pandemic, up 11%.

"We've had a strong six months; sales and profit have grown ahead of expectations, and we've outperformed the market," said chief executive Ken Murphy.

"With various different challenges currently affecting the industry, the resilience of our supply chain and the depth of our supplier partnerships has once again been shown to be a key asset."

Tesco's online business was up 2.3%, while shoppers continued to use larger stores and supermarkets in the face of continuing Covid worries.