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Tesco has said a focus on value amid the continuing squeeze on shoppers’ budgets has paid off through a rise in half-year profits.

The UK’s biggest retailer raised its annual guidance on the back of market share gains versus major rivals over the six months to 24 August.

It also credited higher demand for its Finest premium ranges, which were almost 15% up on the same period a year ago.

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Total sales excluding fuel were 4% up at £31.5bn – though its UK like-for-like sales growth slowed in the second quarter.

Nevertheless, its preferred measure of retail adjusted operating profit was up 10% at £1.56bn.

The company said that it now expected the annual figure to come in about £2.9bn.

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That was up from a £2.8bn prediction earlier that would have been flat on its previous financial year.

Tesco said its focus on delivering value on everyday goods, aided by its Clubcard loyalty and Aldi price-matching schemes, had driven volume growth over the period.

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It noted industry data showing its market share at its highest level since January 2022 at 27.8%.

Tesco said that Clubcard now covered 23 million households, claiming it was saving them up to £385 off their annual grocery bills.

It had cut prices, the company said, on more than 2,850 products over the six months by an average of about 9%.

Ken Murphy, the chief executive, said the company was “gearing up for a good Christmas” as he was hopeful over consumer demand.

He told investors: “We’ve been working really hard to offer our customers the best possible value, quality, and service and they are shopping more at Tesco as a result.

“We have lowered prices on thousands of lines, launched or improved over 860 products in partnership with our suppliers and growers, and our customer satisfaction scores continue to improve across a broad range of measures.

“The combination of price, quality and innovation means we are as competitive as we have ever been, and we have been the cheapest full-line grocer for nearly two years.”

Discounters have been eating into the market shares of the likes of Tesco, Sainsbury’s, Morrisons and Asda for almost 15 years.

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The cost of living crisis, sparked by the energy-driven surge in inflation in 2022, forced the big four to invest more in prices.

While Asda and Morrisons, which are now both privately owned, have struggled to keep pace, Sainsbury’s and Tesco’s market shares have proved more resilient.

The Sainsbury’s boss Simon Roberts recently warned that consumer confidence would be unlikely to pick up until the government sets out its tax and spending plans in the budget later this month and interest rates fall further.

Recent surveys have shown confidence plunged after Prime Minister Sir Keir Starmer’s warnings about the
state of the public finances and the likely need for tax increases.

Tesco shares rose by almost 2% at the open.

Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “Tesco’s strategy continues to deliver, with rising revenues and strong profits growth underpinned by increased market share – which now stands at nearly 28%.

“The supermarket group is performing very well in a highly competitive sector – particularly faced with inflationary pressures – built on a foundation of a simplified business model, disciplined capital structure, and investing for growth.

“With the outlook in Tesco’s markets potentially looking more favourable, the group is in a very strong position to protect its market share through its loyalty programmes – namely Tesco Clubcard – and high levels of customer satisfaction.

“The sale of its banking operation and ample free cashflow also provide Tesco with plenty of dry powder to make its next big move”, she concluded.

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Water companies blocked from using customer cash for ‘undeserved’ bonuses

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Water companies blocked from using customer cash for 'undeserved' bonuses

Nine water companies have been blocked from using customer money to fund “undeserved” bonuses by the industry’s regulator.

Ofwat said it had stepped in to use its new powers over water firms that cannot show that bonuses are sufficiently linked to performance.

The blocked payouts amount to 73% of the total executive awards proposed across the industry.

The regulator has prevented crisis-hit Thames Water, Yorkshire Water, and Dwr Cymru Welsh Water from paying £1.5m in bonuses from cash generated from customer bills.

It said a further six firms have voluntarily decided not to push the cost of executive bonuses worth a combined £5.2m on to customers.

Instead, shareholders at Anglian Water, Severn Trent, South West, Southern Water, United Utilities and Wessex will pay the cost.

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David Black, chief executive of Ofwat, said: “In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability.

“While we are starting to see companies take some positive steps, they need to do more to rebuild public trust.”

The announcement came in an Ofwat update on firms’ financial resilience and bonuses.

Industry lobby group Water UK said: “Almost all water company bonuses are already paid by shareholders, not customers.

“All companies recognise the need to do more to deliver on their plans to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers.

“We now need the regulator Ofwat to fully approve water companies’ £108bn investment plans so that we can get on with it.

“Ofwat’s financial resilience report provides yet more evidence that the current system isn’t working, with returns down to 2% and eight companies making a loss.

“It is clear we need a faster and simpler system which allows companies to deliver for customers, the environment and the country.”

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Google could be forced to sell its Chrome browser over internet search monopoly claims

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Google could be forced to sell its Chrome browser over internet search monopoly claims

Google must sell its Chrome browser to restore competition in the online search market, US prosecutors have argued.

The proposed breakup has been floated in a 23-page document filed by the US Justice Department.

It also calls for lawmakers to impose restrictions designed to prevent its Android smartphone software from favouring its own search engine.

If the rules were brought in, it would essentially result in Google being highly regulated for 10 years.

Google controls about 90% of the online search market and 95% on smartphones.

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Court papers filed on Wednesday expand on an earlier outline for what prosecutors argued would dilute that monopoly.

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Google called the proposals radical at the time, saying they would harm US consumers and businesses and shake American competitiveness in AI.

The company has said it will appeal.

The US Department of Justice (DoJ) and a coalition of states want US District Judge Amit Mehta to end exclusive agreements in which Google pays billions of dollars annually to Apple and other device vendors to be the default search engine on their tablets and smartphones.

Google will have a chance to present its own proposals in December.

A trial on the proposals has been set for April, however President-elect Donald Trump and the DoJ’s next antitrust head could step in.

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Dozens of partners take early retirement from accountancy giant PwC

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Dozens of partners take early retirement from accountancy giant PwC

Dozens of partners at PricewaterhouseCoopers (PwC), Britain’s biggest accountancy firm, will next month take early retirement as its new boss takes steps to boost its performance.

Sky News has learnt that PwC’s 1,030 UK partners were notified earlier this week that a larger-than-usual round of partner retirements would take place at the end of the year.

Sources said the round would involve several dozen partners – who command average pay packages of about £1m – leaving the firm.

PwC named about 60 new partners earlier this year under Marco Amitrano, who was appointed as its new UK boss in the spring.

Mr Amitrano is understood to have informed partners about the changes in a voice memo, although one insider disputed the idea that the numbers involved were “significant”.

The partner retirements come as the big four audit firms contend with a sizeable bill from increases in the Budget in employers’ national insurance contributions.

It emerged this week that Deloitte is cutting nearly 200 jobs in its advisory business, according to the Financial Times.

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An ongoing shake-up of the audit profession is not being restricted to the big four firms, with Sky News revealing on Wednesday that Cinven, the private equity firm, was in advanced talks to buy a controlling stake in Grant Thornton UK.

The deal, which is expected to value Grant Thornton at somewhere in the region of £1.5bn, was announced on Thursday morning.

PwC declined to comment.

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