Tesco hits nine-year high in market share as price war looms

In the United Kingdom, Tesco has recently announced positive sales data amid fears of an escalating grocery price war. The supermarket giant reported a market share of 28.5%, the highest it has seen in almost nine years. This announcement came after its like-for-like sales in the UK and Ireland increased by 3.7% over a six-week period that ended on January 4. Notably, there was record trading during the week leading up to Christmas, which likely contributed to the strong sales figures. Aarin Chiekrie, an equity analyst from Hargreaves Lansdown, noted that while Tesco experienced growth in both the UK and Europe, the performance of its wholesale business, Booker, suffered a decline. Nonetheless, Tesco's improved product offerings helped solidify its competitive position in the grocery sector, as evidenced by the reported market share since 2016. Investors are now awaiting the retailer's full-year results, due to be released in early April, with expectations for continued growth. However, the overall market sentiment seems cautious, as shares for Tesco have faced volatility, particularly due to a broader sell-off in the supermarket sector. This wave of selling stemmed from concerns regarding profitability in the face of a potential price war ignited by Asda's return of Allan Leighton, who aims to reclaim market share through aggressive pricing. Prior to this recent sell-off, Tesco and competing supermarket Sainsbury's had already seen significant drops in their stock market values. In the context of these developments, shareholders will be keen to hear insights about Tesco's strategies concerning pricing and profitability in light of the competitive climate. The company has focused on pricing strategies designed to offer customers better value, highlighted through initiatives such as the Clubcard loyalty program and the Aldi price match scheme. Furthermore, even though Tesco has heavily invested in its pricing initiatives, analysts are forecasting an increase in adjusted operating profit to £3.07 billion for the financial year ending in February 2025, up from £2.83 billion in the previous year. Expectations also point to revenues around £70 billion, up from £61.5 billion in the prior year, reflecting stronger shopping volumes amidst market challenges.