Tesco ROI records 2.9% decline in like-for-like sales
Print19 April 2022
UK grocery giant Tesco achieved a 35.8% increase in annual profit, according to its preliminary results for 2021/22. However, the retailer cautioned profit was likely to fall in the current year due to the tough external environment.
Tesco made retail adjusted operating profit of £2.65 billion in the year to 26 February, in line with guidance of slightly above £2.6 billion and up from £1.96 billion in 2020-2021.
However, in the Republic of Ireland, Tesco posted a 2.9% decline in like-for-like sales to just below £2.5 billion (€3 billion). Nevertheless, Tesco pointed out this had increased by 10.6% compared with the same time two years ago.
“The Covid-19 impact was particularly strong in ROI as the restrictions on hospitality were in place for a longer period than in the UK,” the retailer said.
Like-for-like sales in the Republic grew by 0.3% during Christmas and Tesco gained market share in the fourth quarter.
Meanwhile, Ireland’s online business grew by 3.1% on a one-year basis and currently represents 8% of sales.
Outlook
“Given the significant uncertainties in the external environment, we believe it is appropriate to provide profit guidance in the form of a wider than usual range,” said Tesco chief executive Ken Murphy. “Our guidance for the 2022/23 financial year is therefore for retail adjusted operating profit of between £2.4bn and £2.6bn.”
Murphy outlined three main factors which are likely to influence Tesco’s actual performance. Firstly, the extent of further normalisation in customer behaviour as we come out of the pandemic. Secondly, the level of cost inflation that Tesco experiences and its ability to partially offset this through accelerating ‘Save to Invest’ and thirdly, the investment required to maintain the strength of Tesco’s price position relative to the market.
Murphy said Tesco expects bank adjusted operating profit of c.£120m to £160m. “Our focus on cash flow remains unchanged and we expect another strong retail free cash flow performance within our £1.4bn to £1.8bn range,” he added.
The CEO also commented on the current situation in Ukraine, noting: “I want to say that the entire Tesco family is thinking of all the people affected by the war in Ukraine. The impact is particularly close to home for our colleagues in Central Europe, who are supporting with logistics and donations of food and clothing, as well as helping to transport donations to the Red Cross at the Ukrainian border.
“Combining our own donations and matching those of customers, together we have raised almost £4m to support the vital work of the Red Cross, as well as more than £500k for humanitarian organisations in Central Europe,” Murphy said.
Commenting on the challenging external environment, he added: “Against a tough backdrop for our customers and with household budgets under pressure, we are laser-focused on keeping the cost of the weekly shop in check – working in close partnership with our suppliers, as well as doing everything we can to reduce our own costs.”
Tesco saw group sales excluding fuel rise by 2.5% to £54.8 billion, with UK like-for-like growth of 0.4%– up 8.2% on a pre-pandemic two-year comparison.
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