Tesco’s pre-tax profits have tripled to £2.03 billion as the UK’s largest supermarket warns of “significant uncertainties” ahead due to the pressure of soaring inflation and the cost-of-living crisis.
The grocery giant saw pre-tax profits surge in the the year to February 26, up from £636m the previous year, thanks to rising sales and lower pandemic-related costs – which fell to £220m, down from £892 million the previous year.
Retail profits also saw a significant boost for Tesco – up 34.9% to £2.6bn – which has outperformed the market over the last two years, taking market share from rivals and boosting online sales.
The group said sales excluding fuel rose by 2.5% to £54.8bn, with UK like-for-like growth of 0.4% – up 8.2% on a pre-pandemic two-year comparison. Total revenues rose by 6% to £61.3bn.
But Tesco also warned of of “significant uncertainties” weighing on the business, revealing that retail operating profits are predicted to fall this year, to between £2.4 bn and £2.6 bn.
Shoppers’ behaviour is expected to continue to change in the post-pandemic landscape, while costs are also set to soar as the grocer invests in keeping prices low to ensure it remains competitive amid rocketing food inflation.
“Clearly, the external environment has become more challenging in recent months,” said Tesco chief executive Ken Murphy.
“Against a tough backdrop for our customers and with household budgets under pressure, we are laser-focused on keeping the cost of the weekly shop in check – working in close partnership with our suppliers, as well as doing everything we can to reduce our own costs.”
Murphy said Tesco would continue to offer Aldi Price Match, Low Everyday Prices and Clubcard Prices, in its bid to make “more products more affordable, in more places than anyone else.”
Own brand products are also expected to “play an important role” in the shift in consumer behaviour.