At its full-year results yesterday, the supermarket giant announced pre-tax profits of more than £2billion, its highest since 2014 and the accounting scandal that took it years to recover from.
Its revenues for the year to the end of February were up six per cent to £61.3billion.
Tesco says it has increased the size of its buyback scheme to reward investors given its strong cashflow and robust trading.
In October it announced plans to hand back £500million to investors by buying shares and cancelling them.
This pushes up the value of those remaining on the market.
So far the retailer has spent £300million on buybacks but it plans to spend a further £750million between now and April next year.That will take the amount returned to investors in this way to over £1billion, double its original target.
Chief executive Ken Murphy said that despite facing inflationary pressures and the fact that its customers’ budgets are being squeezed, Tesco expects its low prices, convenience and its Clubcard loyalty discounts to help it continue to deliver sustainable growth.
“This confidence, and our strong performance to date, is reflected in the increased pace and scale of our capital return programme, with a commitment to repurchase shares worth £750million over the next 12 months,” he said.
However, Mr Murphy did say in the light of “significant uncertainties” in the economic outlook, Tesco has given a “wider than usual” range for expected profits generated by its shops over the coming year.
It believes they could be between £200million to £400million lower than they are now.
Despite improved results and increased buybacks, as well as its full-year dividend rising 19.1 per cent to 10.9p per share, Tesco’s shares fell yesterday by two per cent to 265.2p.
Neil Shah, at City analysts Edison Group, said: “This is a bracing set of results for Tesco against the outlook of a challenging retail environment.”