Tesco profits soar despite coronavirus hit

Tesco has welcomed a surge in profits, with pre-tax profit soaring by 28.7% to £551m in the first-half of its financial year.

In the same period, group sales rose by 6.6% to £26.7bn, up from £25bn reported the year before. While clothing sales were down by 17.2%, food sales were up by 9.2%, with online orders doubling in the period.

Nonetheless, the supermarket giant was hit by costs totalling £533m as it responded to the pandemic, noting that the increased spend went towards “prioritising customer and colleague safety”.

Its bank was also hit by an operating loss of £155m, driven by a provision for potential bad debts and reduced income.

Tesco now expects its bank to face an operating loss of between £175m and £200m for the 2020/21 financial year, though capital ratios and liquidity “remain strong”.

Whilst “significant uncertainties” remain, the group still expects retail operating profit in the current year to be “at least” the same level as 2019/20 on a continuing operations basis.

Ken Murphy, CEO, said: “The first half of this year has tested our business in ways we had never imagined, and our colleagues have risen brilliantly to every challenge, acting in the best interests of our customers and local communities throughout.  

“I would like to thank all our colleagues for their amazing contribution and I am delighted and proud to be part of such an incredible team.”

He added: “We are absolutely committed to continuing to invest in value for customers and safety for all in these uncertain times.

“Tesco is a great business with many strategic advantages.  I’m excited by the range of opportunities we have to use those advantages to create further value for our customers and, in doing so, create value for all of our other stakeholders.”

Alongside its latest financial report, Tesco has today (7 October) confirmed that Imran Nawaz will join the board as CFO in April 2021.

Nawaz was previously CFO and executive director of Tate & Lyle and senior vice president of finance for Mondelēz Europe. He spent 16 years working at Mondelēz and Kraft Foods in a variety of roles, gaining “broad” financial, business and international experience.

CEO Ken Murphy said: “At the start of this search, we set out with the goal of finding a candidate with a blend of financial, strategic and leadership qualities, and with the right values to fit into the Tesco culture. In Imran, we have found all those attributes and I am looking forward to working alongside him.”

John Allan, chairman, added: “After an extensive search and selection process, I am delighted to welcome Imran to our Board as CFO. He brings a wealth of skills, experience and knowledge in the food sector and will be an incredibly valuable asset to Tesco.”

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