Tesco has today forecast a further increase in profit in its new financial year as strong demand and new customers helped it to post an 11% jump in 2023/24.
The supermarket group also said inflationary pressures had "lessened substantially" and it was seeing signs of improving consumer sentiment.
"Customers are choosing to shop more at Tesco, which is reflected in growing market share as they respond to the improvements we've made to the value and quality of our products," said CEO Ken Murphy, noting it now had "strong momentum".
The Tesco CEO also said today he expects food inflation to stabilise in low single digits for the rest of the year.
"I see that stabilising, that kind of low single digit for the rest of the year is our planning assumption," Ken Murphy told reporters today.
Tesco today forecast retail adjusted operating profit, its key profit measure, of "at least" £2.8 billion for its 2024/25 year.
It made £2.76 billion pounds in the year to February 24 2024, slightly ahead of guidance of £2.75 billion and up from £2.49 billion made in the previous year.
Group sales, excluding VAT sales tax and fuel, rose 7.4% to £61.5 billion, with UK like-for-like sales up 7.7%.
Tesco said its Irish like-for-like sales were up 6.8% for the 12 month period to £2.891 billion and Tesco said it now has a market share of 23.6% at the end of 2023 here.
It added that its total sales grew by 8.5% at constant rates, including a contribution from new stores, driven by the full-year impact of the nine Joyce's stores it bought in 2022, the opening of a new superstore in Adamstown in Dublin and four new Tesco Express stores.
Tesco said that food sales in its Irish shops grew by 9.1%, including volume growth in fresh food supported by an "extensive" refresh in 22 stores, with new and improved produce and bakery areas and innovations in coffee, hot food and food-on-the-go offers.
But it added that the reallocation of space towards food impacted its Home and Clothing sales, which declined by 3.9%.
The group, whose shares are up 9% over the last year, is benefiting from a strategy of matching the prices of discounter Aldi on key items, and the popularity of its Clubcard loyalty scheme, which provides lower prices for members.
These programmes have been being financed by taking over £1 billion of costs out of the business in the two years to February 2024.
Tesco has also benefited from consumers looking to save money by cooking and entertaining at home rather than dining out, with sales of its "Finest" premium range up 15.7% in the year.
The group also said it would buy back a further £1 billion worth of shares over the next year, having already purchased £1.8 billion since October 2021.
The company announced in February the sale of its retail banking activities to British bank Barclays for around £700m, as it concentrates on its core food business.
The deal is due to close in the second half of this year and Tesco has said it will return the majority of cash proceeds to shareholders.
Tesco's chief executive also said today that consumer habits built up over the last two years of the cost of living crisis are persisting, highlighting that shoppers treating themselves at home is still driving sales in the supermarket's premium range.
"A lot of the habits that have been built up over the last two years are actually persisting but I do think customers are responding when they see a new product or a high quality proposition at great value," CEO Ken Murphy told reporters after Tesco reported annual results.
"I do think there is a little bit more now of a habit of eating in and entertaining in and then treating yourself," he said.
