"Tesco has warned that the UK grocery sector faces an intensifying price battle in the run-up to Christmas, even as it raised its full-year profit forecast after winning market share over the summer. The UK's largest supermarket group now expects to deliver annual profits of up to £3.1bn, £100m higher than previous guidance, after its decision to cut prices on 6,500 products by an average of 9% drew in more customers."
"Tesco chief executive Ken Murphy acknowledged that rivals had already signalled their intention to compete aggressively on pricing. Earlier this year, Asda pledged to deploy a "significant war chest" to drive down costs. "Some of our competitors went pretty strong on their statement of intent at the start of the year and have acted on that. It doesn't feel that rational. We are anticipating the second half could be more intensive, not less," Murphy said."
Tesco raised its full-year profit forecast to as much as £3.1bn, £100m above prior guidance, after cutting prices on 6,500 products by an average of 9% that drew in more customers. Grocery inflation at Tesco ran well below the industry rate of 4.9% according to Worldpanel. CEO Ken Murphy said rivals have signalled aggressive pricing and that the second half could be more intensive, with Tesco pulsing strong deals over the next three months. Group sales rose 5.1% to £33bn in the six months to 23 August, while pre-tax profits fell 6.3% to £1.3bn due to restructuring, bank separation, and price investments. Tesco offset pressures through efficiency savings and AI-driven forecasting to predict demand, cut waste, and optimise staffing.
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