Tesco profits up 20% as shoppers move back to premium brands
The boss of Tesco exuded confidence about the economy yesterday as he claimed shoppers were getting back to treating themselves.
Chief exec Ken Murphy said consumers were “in good shape” and noted sales of its more expensive Finest range had risen by almost 15 per cent in the past six months.
The boost in sales of upmarket products is a sharp reversal from the trend during the cost-of-living crisis when sales of cheaper budget and own-brand products rocketed.
Mr Murphy said that shoppers had a “willingness to spend a little bit more to treat themselves… While they’re not doing cartwheels down the aisles, they’re in reasonably good shape.”
He acknowledged there was a “lot of uncertainty in the world” but said Tesco was preparing for a strong Christmas.
“We see customer sentiment improving before Christmas,” Mr Murphy said. He added that Tesco was expecting a record-breaking Halloween, with three million pumpkins forecast to be sold at its stores this month.
His upbeat comments come despite a slew of economic data showing falling consumer confidence as Brits worry about what may be in this month’s Budget.
Mr Murphy’s tone is also at odds with remarks made by Sainsbury’s chief exec Simon Roberts, who a day earlier cautioned that shoppers were holding back on spending due to worries about what Labour will announce.
However, Tesco, Britain’s biggest supermarket chain, is already riding high after boosting its profits by a fifth to £1.9billion on the back of its sales rising by 3.5 per cent to £31.46billion in the half-year.
The boost gives Tesco its highest market share since January 2022. Mr Murphy said its Aldi Price Match and Clubcard promotions had made it more competitive.
Around 23 million British households, 80 per cent of the country, have a Tesco Clubcard.
ANALYSIS: GIANT IS WARY OF REFORM
As one of the country’s biggest employers, with more than 330,000 staff, Tesco has carefully watched Labour’s radical plans for worker reforms.
The government is desperate to get it onside too.
The message from Britain’s largest supermarket yesterday suggested the proof would be in the pudding.
Boss Ken Murphy urged the government to ensure that its overhaul of workers’ rights didn’t end up being a drag on the economy.
He said the Employment Rights Bill needed “to make sure that whatever the government decides to put forward has the intended consequence of stimulating productivity and growth and protecting workers at the same time.”
He was pleased the government would consult on its proposals before legislation — suggesting that there would still be more lobbying behind the scenes for many months to come.
Privately, business chiefs say that Labour is warming to the idea of longer probation periods, after realising that firms need to be comfortable in taking risks when hiring.
Plea on electric car VAT
Private buyers are increasingly choosing diesel cars ahead of electric ones — prompting the motor industry to call for more support in hitting its Net Zero targets.
The Society of Motor Manufacturers and Traders said private diesel registrations in September were up by 17.2 per cent on last year — an increase of 1,369 units.
That compared with a rise of just 430 pure battery electric registrations — 3.7 per cent — despite huge discounting.
Bosses from Ford, Honda, Kia, Mercedes, Nissan, VW, Jaguar Land Rover and Vauxhall-maker Stellantis have written to Chancellor Rachel Reeves ahead of her October 30 Budget, calling for VAT cuts on electric vehicles and public charging points.
These cost an average of 80p per kilowatt hour — so drivers pay more to recharge electric cars than petrol and diesel drivers do to fill up the tank.
£666m hell of a sale
Investors dumped a devilish £666million worth of UK shares last month, amid fears the Budget could push up capital gains taxes.
Figures from global fund network Calastone show that UK funds were out of favour while other markets saw inflows of cash.
Capital gains tax on shares being sold is currently at 20 per cent but the Chancellor is reportedly considering increasing this to 45 per cent.
Mulberry help
Mike Ashley’s Frasers Group is backing Mulberry’s £10million cash call to investors — just days after having an £83million hostile takeover bid rejected.
Frasers, which owns a 37 per cent stake in the luxury bag brand, will put £3.9million into the share sale to avoid being diluted. It has also not ruled out a further bid offer.
But sources say that is unlikely to be successful, with the company being backed by its majority shareholder Challice, owned by Singaporean billionaire Christina Ong.
Upper Crust owner SSP enjoyed a 9 per cent rise in UK sales in the last three months.
Its railway station shops have benefited from fewer rail strikes while its airport cafes have been boosted by more holidaymakers.
Chat for £118bn
ChatGPT owner OpenAI is now worth £118billion after its latest funding round.
The artificial intelligence firm has raised another £5billion from investors, including tech giant Microsoft and AI chipmaker Nvidia.
Only four companies on London’s FTSE 100 are still worth more. It also has a new £3billion credit facility from big Wall Street banks.
It comes amid speculation that the Californian firm’s boss, Sam Altman, is restructuring the company into a for-profit entity, rather than non-profit.
SHARES
- BARCLAYS down 0.85 to 219.35
- BP up 2.40 to 409.00
- CENTRICA up 1.65 to 116.00
- HSBC up 9.00 to 685.00
- LLOYDS down 0.22 to 57.44
- M&S up 1.90 to 370.30
- NATWEST down 4.40 to 329.70
- ROYAL MAIL down 1.00 to 342.40
- SAINSBURY’S up 3.60 to 292.80
- SHELL up 43.00 to 2564.00
- TESCO up 9.10 to 364.00