Tesco chief executive Ken Murphy has played down speculation about a potential Sainsbury’s-Morrisons merger as Britain’s biggest supermarket upgraded its annual profit forecast following a strong first half. The supermarket boss said he did not “overthink possible permutations and combinations” when asked about the prospect of consolidation among rival grocers.
Strong half-year results
His comments came as Tesco reported half-year sales of £33.8billion, excluding fuel and VAT, while adjusted operating profits climbed 6.3% to £1.8billion. The strong performance prompted the retailer to raise the lower end of its full-year profit guidance by £150million, with Tesco now expecting annual profits of between £3.15billion and £3.3billion.
This comes as shoppers continue to navigate pressure on household budgets and uncertainty over the wider economic outlook.
Merger speculation dismissed
Mr Murphy declined to be drawn into speculation about a possible tie-up between Sainsbury’s and Morrisons, offering little indication of how such a deal might reshape the supermarket sector. He also refused to comment on rumours that Tesco itself could make a move for Majestic Wine.
However, Mr Murphy made clear that his focus remained on Tesco’s own performance rather than hypothetical moves by competitors.
Online and premium growth
Digital shopping continued to support Tesco’s results, with UK online sales increasing by 8.4% during the half-year period. The retailer’s rapid delivery service, Whoosh, also recorded a significant boost, with sales jumping 37%.
Tesco’s premium Finest range was another positive win for the major supermarket, with sales climbing 9% as shoppers continued to make room for higher-end products despite pressure on their finances. Fuel sales also rose by nearly a fifth, largely reflecting higher oil prices.
Consumer confidence warning
Despite the encouraging results, Mr Murphy warned that economic uncertainty and political tensions were weighing on consumer confidence.
