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Supermarkets

Tesco profits fall 20% despite rising sales

It comes as the group said the pandemic had ‘far-reaching’ impacts on its operations, as it incurred Covid-related costs of £892m

Tesco has reported that pre-tax profits plunged 19.7% to £825m in its latest full-year results, despite UK like-for-like sales increasing by 7.7% to £39.4bn in the period.

It comes as the group said the pandemic had “far-reaching” impacts on its operations, as it incurred Covid-related costs of £892m, largely attributed to safeguarding its customers and employees, primarily through higher payroll costs.

The group also forgoed £535m in business rates relief during the period, further impacting its profit.

Nonetheless, UK online sales rose 77% to £6.3bn in the period, whilst the number of weekly delivery slots doubled over the year to 1.5 million as Tesco continued to gain customers “from all key competitors”.

Revenue (inc. fuel) fell marginally by 0.4% to £57.9bn from £58.1bn as stores remained open during lockdown.

Ken Murphy, chief executive, commented that while the pandemic is not yet over, the supermarket brand is “well-placed to build on the momentum in the business”.

He said: “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.

“We believe we can create significant further value for them and every stakeholder in our business by continuing to focus on value, loyalty and convenience for customers, underpinned by strong capital discipline.”

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