Tesco: Strong Market Share Gains Continue and Guidance Confirmed

Tesco reported a first-quarter trading update that included a 3.4% increase in retail sales. Sales in the United Kingdom and the Republic of Ireland were up 4.6% and 4.4%, respectively, with Booker down 1.3%. Catering sales rose by 2.2%, and retail sales were up 1%. From a channel perspective, digital channel sales increased by 8.9%, driven by volume growth. Tesco achieved strong market share gains in the UK, up 52 basis points year on year to 27.6%, supported by positive switching gains (customers switching from other retailers to Tesco), and in Ireland, up 59 basis points in the first quarter. Booker's performance was not as bad as the headline growth number suggests (overall sales declined 1.3%), given strong performance last year and the continued tobacco market decline.