Tesco posts reduced profits as customers watch every penny
Tesco has posted a decline in profit in the first half of its financial year after its experienced significant cost inflation and its customers watched every penny.
During the period, the supermarket’s adjusted operating profit fell by 9.8% to £1.315 billion despite group sales rising by 3,1%.
Meanwhile, statutory pre-tax profit dropped by 63.9% to £413 million.
Ken Murphy, chief executive of Tesco, said: “We know our customers are facing a tough time and watching every penny to make ends meet. That’s why we’re working relentlessly to keep the cost of the weekly shop as affordable as possible, with our powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices, together covering more than 8,000 products, week in, week out.”
Giving an update on its UK performance, Tesco said like-for-like sales grew by 0.7% in the half year following a 1.5% drop in its first quarter and a 2.8% uplift in the second. The retailer said it benefited from the exceptionally warm weather over the summer and the Platinum Jubilee celebrations.
Tesco now forecasts that its underlying full year retail adjusted operating profit will be at the bottom end of previous guidance.
The supermarket has also announced a new price-lock commitment through which it will freeze the prices of more than a thousand everyday products until 2023.
Murphy added: “As we look to the second half, cost inflation remains significant, and it is too early to predict how customers will adapt to ongoing changes in the market. Despite these uncertainties, our priorities are clear. We have the right long-term strategy and we will continue to balance the needs of all of our stakeholders. Most importantly, we will stay focused on delivering value for our customers and supporting them in every way we can.”
