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esco’s pricing and efforts to stop customers switching to discount rivals will be in the spotlight again as the supermarket giant updates shareholders next week.
The UK’s largest grocery chain has appeared resilient and seen volumes continue to grow over the past year despite pressure from the cost-of-living crisis.
However, intense competition in the industry means the group is coming under continued pressure to preserve profitability as some higher costs persist.
The firm will shed light on its financial performance over the six months to August in an update on Wednesday.
Shares in Tesco are up by a fifth so far this year despite the difficult backdrop for the grocery industry.
The positive trajectory has come despite German discount rivals Aldi and Lidl snapping up new customers, with figures from Kantar showing that Tesco had grown its market share to 27.3% in September from 26.9%, despite challenging conditions.
Tesco has invested heavily in its pricing to retain and grow its customer base, as well as continued commitment to its Aldi Price Match campaign.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Tesco’s razor-sharp focus on keeping prices down is helping it fend off rival discounters, which should bode well for its half-year numbers.
“The retailer’s huge scale is helping to power its value offering and the deep-rooted nature of its supplier relationships is ensuring it can stay super-competitive.
“Expanding the Aldi price match promotion has also been paying off, enabling Tesco to retain shoppers’ loyalty and discourage them from going elsewhere and investors will want to see this trend continuing.”
Over the first quarter of its financial year, Tesco reported like-for-like sales growth of 8.2% against a year earlier, with a 9% increase in the UK.
Investors will be keen to see that this growth has continued despite a slowdown in inflation across the sector.
They will also have an eye on profitability. In April, chief executive Ken Murphy offered a forecast of broadly flat adjusted operating profit from its retail business of £2.5 billion for the current full year.
Some analysts have suggested it could be marginally higher and shareholders will be keen for more guidance about the profit outlook as a result.
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