Tesco profits fall faced with “unprecedented levels of inflation”
Irish sales rose 3.3% across the supermarket’s financial year to £2.6bn (€3bn) on a like-for-like basis.
14 April 2023
Tesco reports that profits fell in the year to 25 February, faced with “unprecedented levels of inflation” in the prices it paid to suppliers across the year.
While revenues across the year increased, profit before tax fell by 50% to £1bn (€1.14bn).
The supermarket said total adjusted operating profit fell by 7.1% on a constant currency basis. The Irish Independent reports this figure stood at £2.6bn (€3bn), down from £2.8bn (€3.18bn) reported the previous financial year.
Tesco now anticipates that it will deliver a “broadly flat” level of retail adjusted operating profit in this financial year.
The grocer recorded group sales of £57.7bn (€65.6bn) for the year. This was an increase of 5.3% on a constant currency basis from the prior year.
Irish sales rose 3.3% across the supermarket’s financial year to £2.6bn (€3bn) on a like-for-like basis. This included a 6.6% rise in revenues in the second half of the year as market inflation surged.
However, operating retail profit for Ireland and the UK was £2.3bn (€2.6bn), a decrease of 7%.
Tesco attributed this result to the impact of lower year-on-year volumes of purchases from customers, on top of an increase in investment to shield shoppers from the full impact of price increases.
Cork-born group chief executive Ken Murphy said the business had faced unprecedented levels of inflation in the prices paid to suppliers for products. He likewise pointed to a surge in the cost of operating the business in the past year.
Tesco added that it is now working with suppliers to “mitigate as much inflation as possible.”
“We continue to target growth through making Tesco the most convenient place to shop. This year we have opened 91 stores across the group,” Murphy said.
This number included four new convenience stores in Ireland, bringing the total number of Tesco outlets here to 166.
“Our acquisition of nine Joyce’s stores in the Republic of Ireland and, more recently, the Paperchase brand in the UK signals our appetite to find new, value-creating growth opportunities in our core markets,” Murphy said.
Meanwhile, Clubcard prices (lower prices for those who are members of Tesco’s loyalty scheme) rose in popularity here, with sales penetration rising to 76.5%. Clubcard members using the app also rose to 700,000 across the year.