Tesco Earnings: Solid Performance Across the Board and Upgraded Guidance in Line With Our Estimates

Tesco announced fiscal 2024 interim results that included retail like-for-like sales up 7.8%. U.K. and Ireland sales were up 8.4% (U.K. up 8.7%, Ireland up 6.9%, and Booker up 7.5%). Booker remains a strong contributor, with retail and catering driving performance (up 14.2% and 11.6%, respectively) and tobacco the main detractor (down 5.9%). From a channel perspective, large stores continue to outperform, growing 9.3% in the first half versus 5.1% sales growth for convenience stores and 10% sales growth for the digital channel (13% of U.K. sales), with Tesco once again commenting on online market share gains of 71 basis points, close to 37.5%. Profit was up 17.2%, implying a margin of 4.4%, similar to prepandemic levels, driven by cost savings, volume growth, and a strong contribution by Booker.