London, Sept 30 - Tesco, Britain's biggest retailer, met forecasts with a 10.3 percent rise in first-half profit and said on Tuesday like-for-like sales growth at its British operation accelerated over the summer months.
"Our business is strong, broadly based, increasingly international and, I believe, well-placed not just to cope with the challenges which lie ahead but also to grasp the growth opportunities open to us," Chief Executive Terry Leahy said.
The supermarket group, which serves more than 20 million British shoppers a week, said profit before tax and one-off items was 1.453 billion pounds ($2.62 billion) in the 26 weeks to Aug. 23 on a 13.8 percent rise in sales to 25.6 billion.
The interim dividend was raised 11.6 percent to 3.57 pence.
Analysts on average expected a profit of 1.43 billion pounds and sales of 25.78 billion, according to a Reuters poll.
Tesco, the world's third-biggest retailer behind France's Carrefour and U.S. group Wal-Mart, said like-for-like sales excluding fuel, a key industry measure, rose 4.0 percent in its main market in Britain in its second quarter, an acceleration from 3.5 percent in the first quarter.
According to researchers TNS WorldPanel, Tesco has been losing UK market share to rivals more closely associated with low prices, such as Wal-Mart-owned Asda and Morrison, as well as smaller discounters such as Aldi and Lidl.
But Tesco, which still has a British market share of over 30 percent, is fighting back with a new low-cost range of products.
The group, which runs more than 3,700 stores in 13 countries, said sales densities at its new U.S. chain, Fresh & Easy, were building well, "with the average running at $11 per square foot per week, which is already substantially higher than the U.S. supermarket industry average.
"Our best stores are now running at more than $25 per square foot and the stores opened since the Spring are averaging sales densities close to $13 per square foot per week."
Tesco shares closed at 369.90 pence on Monday, valuing the firm at about 29.1 billion pounds.