Tesco experienced a significant drop in pre-tax profit from £2 billion (€2.27 billion) to around £1 billion in the year to the end of February, due to pressures from rising prices and customers struggling with soaring inflation. This was despite their efforts to invest in delivering great value and quality for their customers.
Adjusted operating profit decreased by 6.9%, in line with analyst predictions, due to the impact of lower sales volumes, investment in the business, and steep cost rises.
CEO Ken Murphy commented that it had been an ‘incredibly tough year’ for their customers, and they had done all they could to help. Tesco also revealed they had achieved a ‘market-leading performance’ during the Christmas period, and had continued to ‘inflate behind the market’.
The business reported a £982 million hit to statutory profit, largely due to an impairment charge on its assets. Zoe Gillespie, Investment Manager at RBC Brewin Dolphin, expressed her views on Tesco’s results, saying that whilst profits may be down, sales growth remains robust and Tesco is well-positioned to benefit from consumers looking for savings on their weekly shop. Despite the predicted flat profit for the year ahead, the continuation of their share buyback scheme and strong execution of their strategy mean Tesco remains in good shape.
