By Elena Vardon


Tesco expects profit to rise in the year ahead, signaling improving consumer demand as inflation tapers off.

The U.K.'s largest grocer by market share expects to make at least 2.8 billion pounds ($3.55 billion) in retail adjusted operating profit--its preferred metric, which strips out exceptional and other one-off items--in fiscal 2025, plus around GBP80 million from the retained business of its banking branch, insurance and money services.

The outlook compares with expectations of GBP2.99 billion for the group as whole, taken from a company-compiled consensus, and GBP2.83 billion for its last fiscal year ended Feb. 24.

"We have strong momentum in our business, and are encouraged by signs of improving consumer sentiment," said Chief Executive Ken Murphy.

The new guidance comes as shop-price inflation across the U.K. loses steam, supporting customer demand and volumes. Grocers last year battled higher costs and tried to prop up demand among cost-conscious consumers, including through loyalty program discounts.

For fiscal 2024, the FTSE 100 company said revenue including fuel rose to GBP68.19 billion from GBP65.32 billion as it saw a return to positive volume growth.

The London-listed group launched a GBP1.0 billion share buyback program, partly funded by the proceeds from the sale of most of its Tesco Bank operations to Barclays.

It also proposed a 8.25 pence a share final dividend, which takes the full-year payout to 12.10 pence.


Write to Elena Vardon at elena.vardon@wsj.com


(END) Dow Jones Newswires

04-10-24 0241ET