Tesco chairman John Allan is defending its “slender” profit margin as food prices continue to rise during the cost-of-living crisis.
He said that the UK’s largest retailer’s profit margin of 4p in the pound was “slender” compared to other industries, and also denied that Tesco was taking advantage of higher prices to make bigger profits.
However, Allan said the supermarket was “doing our bit” to help customers cope with the impact of high inflation, which rose to 18.2% last month – the highest since 1978.
Tesco will be publishing its full-year profits later this month, and while Allan said he couldn’t comment on the expected figures, he hit back at any suggestion that the business was making large profits at the expense of customers.
“Anyone who thinks that four pence in the pound as a profit margin is excessive, I’d love to have a conversation with because, you know, in comparison with most other industries those are very, very slender returns on sales.”
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The Bank of England governor, Andrew Bailey, recently suggested that businesses should think twice before raising prices to cope with rising costs, due to the risk it has on driving up the cost-of-living even further.
Mr Allan talked about the governer’s plea to firms, saying to the BBC: “By and large, we have to accept the price increases that our suppliers provide. All the evidence I’ve seen suggests that Tesco has been raising prices more slowly than our competitors.”
Tesco has faced an backlash from suppliers and customers over plans to charge new fees to sell products online recently, which now looks set to ease.
Mr Allan said the firm was working “constructively” with suppliers: “We always made clear this was a voluntary programme. We’ve taken great care to ensure that we comply with the requirements of the grocery codes adjudicator.
“We’ll just have to wait and see what the outcome of those discussions is.”
