Shares of Tesco plc (LON: TSCO) ended roughly flat on Friday even after the supermarket giant said its underlying U.K. sales took a hit in the first quarter of fiscal 2023.
Tesco U.K. sales were down 1.5%
Tesco blamed inflation as it reported a 1.5% decline in homeland sales. According to CEO Ken Murphy, higher prices are now translating to early signs of changing consumer behaviour.
There’s an elevation in the number of shopping trips, we’re seeing basket sizes coming down a little bit. Staples like pasta, bread, and beans is where we’re seeing customers choose to trade down to entry level or core own brand level product.
U.K. inflation jumped to a forty-year high of 9.0% in April and experts forecast a further increase to double-digits in the coming months.
Tesco reiterated its full-year outlook
Despite lower sales, Tesco expanded its market share in the U.K. by 37 basis points. Comparable sales overall, it added, were still resilient in the recent quarter. Excluding fuel and value-added tax, total like-for-like sales went up 2.0% to £13.57 billion.
The supermarket giant also reiterated its outlook for the full financial year. It forecasts up to £2.60 billion in retail adjusted operating profit in 2023 versus the year-ago figure of £2.65 billion.
The stock that trades at a PE multiple of 12.79 is down more than 15% versus the start of the year.
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