Tesco posts drop in full year profit
Tesco has reported that its full year pre-tax profit has dropped by 19.7% to £825 million despite strong grocery sales during the Covid-19 pandemic.
This compares to a profit of £1.03 billion in the prior year.
Retail operating profit before exceptional items fell by 14.7% after the retailer was hit by Covid-19 related costs of £892 million in the UK and its decision to forgo £535 million worth of business rates relief.
However, group like-for-like sales climbed by 6.3% while UK like-for-likes saw an uplift of 7.7% in the period. Group sales excluding fuel increased by 7.1% to £53.4 billion.
In the UK and Ireland, total sales rose by 8.8% as the retailer benefited from a shift towards ‘in-home’ consumption. Demand was particularly strong in the fresh food, grocery and beers, wines and spirits categories across the year.
Tesco said consumer behaviour in central Europe was different to that seen in the UK and Ireland. This meant that sales declined by 0.6% in the region as customers shopped locally and trading restrictions in general merchandise led to a reduction in footfall in Tesco’s larger stores.
Ken Murphy, Tesco chief executive, said: “Tesco has shown incredible strength and agility throughout the pandemic. By putting our customers and colleagues first we have built a stronger business. I’d like to say a huge thank you to the entire team for rising so selflessly to every challenge they’ve faced. Their efforts have been truly heroic.
“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business. We have strengthened our brand, increased customer satisfaction and improved value perception. We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform. Sustainability is now an integral part of our business strategy and we’re doubling down on our efforts to reach net zero.”