Britain’s largest supermarket chain faces mounting pressures from wage increases and rising costs, casting a shadow over its record-breaking Christmas trading period and highest market share since 2016.
Tesco’s Chief Executive Ken Murphy revealed the retailer will shoulder an additional £250 million annually due to increased employer national insurance contributions. The FTSE 100 retailer, which employs 330,000 staff across the UK, must also contend with forthcoming minimum wage rises, with full details to be disclosed in their annual results.
Despite these challenges, the retail giant delivered impressive festive trading figures, with like-for-like sales climbing 4.1% year-on-year in the six weeks to 4 January. The company’s premium Finest range witnessed a remarkable 15.5% surge, driven by strong demand for Premier Cru champagne and seasonal favourites.
The supermarket chain now commands 28.5% of the grocery market, gaining ground from both premium and discount competitors. Online operations showed significant growth, with sales rising 10.8%, while the Whoosh one-hour delivery service handled nearly 1.2 million orders during the festive period, more than doubling year-on-year.
Murphy emphasised the company’s commitment to minimising price increases for customers, announcing plans to achieve £500 million in savings this year. He urged government cooperation on business rates reform, warning that potential increases for larger-format shops could adversely impact high street operations.
The cautious outlook prompted a modest share price decline of 2p to 368.1p, despite the company maintaining its full-year retail adjusted operating profit guidance of £2.9 billion. Analysts at Jefferies suggested this conservative stance might represent “an excess of caution” given the strong performance indicators.
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