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Tesco’s share price rose by 4.5 percent on Wednesday morning as investors were buoyed by the prospect of surging profits. Tesco stocks reached 264.24p in early trading and was the top riser on the FTSE 100 index.
Markets rallied after the UK’s largest food retailer upgraded its profit forecast for the full year.
It now expects operating profits of between £2.5billion and £2.6billion.
The latest financial results found Tesco sales, excluding fuel, rose by three percent to £27.3billion in the six months to August.
Operating profit in the same period totalled £1.3billon.
The profit figure represents a 29 percent increase compared to the previous year.
In the wake of the coronavirus pandemic, Tesco had previously limited its growth forecasts to a “strong recovery in profitability”.
Tesco CEO Ken Murphy said the latest numbers showed the firm had “outperformed the market”.
He said: “We’ve had a strong six months; sales and profit have grown ahead of expectations, and we’ve outperformed the market.
“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.”
Russ Mould, investment director at broker firm AJ Bell, said: “The supermarket is doing remarkably well if you consider it is now lapping an incredibly busy period for the company.
“Its 2020 half-year to the end of August included the time when large parts of the nation raced to stockpile goods and many people had no choice but to try online grocery orders for the first time.
“Tesco excelled at being able to give people the delivery slots they needed. A year on, sales are higher still as it has grown market share.”
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The positive financial data comes in the wake of strained supply chains and labour shortages across the UK.
The Tesco chief reassured customers the supermarket is prepared for the busy festive period.
Mr Murphy acknowledged there may be “bumps in the road” in the lead-up to Christmas but said Tesco had “planned to within an inch of our lives”.
The Tesco chief also defended the retail industry’s record on employment and announced a new £500million share buyback scheme.
Mr Murphy pointed out Tesco has increased shop floor wages by 30 percent since 2014 and highlighted the firm’s willingness to promote from within.
He said: “It’s very important to remember that retail is one of the few industries where there are loads of examples of chief executives coming from the shop floor, starting at 16 and working their way right to the top of businesses.”
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