Tesco shares reach new high

Tesco shares were at an all-time high today after the retail giant brushed aside reports of a spending slowdown to post another leap in sales.

Price cuts and the further expansion of non-grocery business helped the group smash City hopes with a 9.8% jump in UK like-for-like sales over the autumn.

With one expert calling the rate of growth “spectacular”, Tesco shares lifted 4% to 310p – the highest level since the retailer’s flotation in 1947.

It is now firmly on course to break the £2bn (€2.9bn) annual profits barrier this year, and reinforce its position as the UK’s biggest supermarket chain.

The group’s recent growth came from increased volumes as prices – apart from at the petrol forecourt – went into reverse for a second quarter in a row.

The third quarter figures showed total sales in the UK grew by 12.3%, helped by a 2.5% boost from new stores and strong demand on the forecourt as Tesco sought to keep pump prices low despite rising oil costs.

Stripping out petrol, like-for-like sales were up 7.5% during the period - well in line with the company’s recent sales trend.

Tesco added that its international operations continued to make progress with sales up 18.2% at constant exchange rates and by 11.9% on a reported basis.

With operations in 12 countries, including Ireland, Hungary, Poland, Taiwan and Japan, Tesco said it expected new store openings to provide further growth outside of the UK.

Across the group, sales were up by 12.2% during the quarter with the improved performance at the company’s 780 UK stores achieved during one of the most competitive environments seen by retailers for years.

Simon Proctor, an analyst at broker Charles Stanley, said: “In the year that Tesco was supposed to suffer from a reversal in fortunes for Sainsbury and the old Safeway business, the company continues to extend its lead.”