Tesco profits double in H1 amid ‘resilient’ performance

Tesco has revealed that pre-tax profits rocketed 107% to £1.14bn for the six-months ending 28 August 2021, despite supply chain issues affecting much of the grocery sector.

Revenue also grew by 5.9% to £30.4bn, largely boosted by a “significant” recovery in travel driven by the easing of government restrictions earlier in the year.

Despite ongoing supply issues across the country, Tesco said it was able to use its “strong” supplier relationships and distribution capability to maintain good levels of availability for customers, contributing to what it called a “market outperformance”.

The group also saw its operating profit rise by 41% in the period, which it attributed to stronger UK sales and lower Covid-related costs. The supermarket giant only incurred £122m of Covid-19 related costs in total, which was less than the £533m costs incurred in the first half of last year.

This year’s costs primarily related to colleague absence, maintaining a safe environment in stores for colleagues and customers and additional costs in relation to elevated online sales. The group estimates around £220m Covid-19 related costs to still be incurred this year, however.

Due to the “strong” performance in the first half of the year, the group said it now anticipates adjusted retail operating profit for the full-year to be between £2.5bn and £2.6bn.

Ken Murphy, chief executive, said: “The scale and reach of our store estate and online operations are unmatched in the UK. Our ability to reward loyalty through Clubcard enhances our relationship with customers.

“Today, we are sharing the strategic priorities that will enable us to build on these advantages to stay competitive, accelerate growth and generate between £1.4bn and £1.8bn retail free cash flow per year.”

He added: “These priorities will ensure we do the basics brilliantly, operate as efficiently as possible and grow our business by building unbeatable digital, convenience and loyalty platforms.”