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Investing.com -- Tesco Plc (LON:TSCO) shares rose over 2% on Thursday after the company reported stronger-than-expected first-quarter sales, primarily driven by its U.K. business.
The company maintained its full-year guidance, a move that analysts noted was anticipated given the early stage of the fiscal year.
For the first quarter, Tesco’s group sales, excluding VAT and fuel, reached £16.4 billion, surpassing the Visible Alpha consensus of £16.1 billion.
This included like-for-like sales growth of 4.6% year-over-year, compared to a consensus of 3.9% year-over-year.
The U.K. division was a key performer, with sales totaling £12.3 billion against a consensus of £12 billion.
U.K. LFL sales grew by 5.1% year-over-year, exceeding the consensus of 4% year-over-year.
Food sales in the U.K. were up 5.9% year-over-year, with a notable contribution from fresh food. Non-food sales, excluding toys, also rose significantly by 6.2% year-over-year, benefiting from new and expanded ranges and warmer weather.
The U.K. market share improved by 44 basis points year-over-year, and online sales in the U.K. outperformed, growing by 11.5% year-over-year, leading to a 163 basis points increase in online market share due to increased capacity and improved customer satisfaction.
In the Republic of Ireland (ROI), sales were £772 million, slightly above the consensus of £761 million.
LFL sales growth in ROI was 5.5% year-over-year, higher than the 4.1% consensus. Booker, Tesco’s wholesale business, returned to LFL sales growth after four quarters of decline, with sales of £2.3 billion against a consensus of £2.2 billion.
This represented a 2% year-over-year LFL sales increase, exceeding the consensus of -0.4% year-over-year.
Core catering within Booker grew by 7.3% year-over-year, and core retail by 5.4% year-over-year.
Central Europe’s sales were £997 million, aligning with consensus, and LFL sales growth was 4.1% year-over-year, compared to a consensus of 3.5% year-over-year.
Fresh food sales in Central Europe were up 7.3% year-over-year. Tesco indicated targeted price investments in this region due to increased competitive pressure and new regulations in Hungary, which impose a margin cap on certain food products.
Tesco reaffirmed its fiscal year 2026 guidance for Group adjusted operating profit, projecting it to be between £2.7 billion and £3 billion, consistent with the company-compiled consensus of £2.9 billion.
Free cash flow guidance for the year remains within the medium-term range of £1.4 billion to £1.8 billion, with a company-compiled consensus of £1.6 billion.