Tesco’s Loyalty Boost Sparks Channel BreakoutTesco's share price has come alive, breaking out of its recent lull just in time for the critical holiday season. With a long-term uptrend intact and a timely nod from the UK regulator on its loyalty schemes, the supermarket giant is flexing its retail muscles once again.
A Year of Growth, Loyalty, and Market Leadership
Tesco’s share price has been locked in a strong uptrend this year, supported by the 50-day simple moving average (SMA) consistently trading above the upward-sloping 200-day SMA. This sustained bullish momentum reflects the company’s strong performance, bolstered by robust earnings and strategic initiatives.
In its most recent half-year results for 2024, Tesco delivered a 7.4% rise in group sales to £30.2 billion and operating profit growth of 13.5% to £1.5 billion, highlighting resilience in a challenging retail environment. Its market-leading Clubcard scheme continues to drive customer engagement, contributing to a 3.7% increase in like-for-like sales in the UK and Ireland.
In September, Tesco surged to fresh highs, before entering a period of mean reversion. Prices pulled back within a broad descending channel as they consolidated around the 50SMA, offering a classic technical setup that hinted at a potential resurgence.
That resurgence materialised last week following a report from the Competition and Markets Authority (CMA) confirming that supermarket loyalty schemes, including Tesco’s Clubcard Prices, offer genuine savings for consumers. The CMA’s review of 50,000 grocery products revealed average savings of 17-25% for loyalty scheme members, dispelling scepticism about misleading promotions. This endorsement not only reassures shoppers but strengthens Tesco's position as a leader in customer value. With 70% of UK households using Tesco's Clubcard, this affirmation solidifies its competitive edge during the critical holiday shopping period.
The breakout from the descending channel has realigned short-term momentum with Tesco's broader uptrend. With the festive season approaching, Tesco appears well-positioned to capitalise on increased consumer spending. If current trends hold, the shares could retest September highs and potentially aim for fresh peaks, making this a stock to watch through year-end.
Tesco (TSCO) Daily Candle Chart
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