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Tesco bounces back from pandemic but warns of profits amid cost of living crisis

Excluding banking, retail profits rose 35% to £2.6bn.
// Tesco reports adjusted operating profit of £2.65bn for the year to February 26, slightly above forecasts
// For the year 2022-23, it forecast adjusted retail operating profit of between £2.4 billion and £2.6 billion.

Tesco rebounded from the pandemic with a 65% increase in operating profit, but warned that current year profits could fall as inflationary pressures and the cost of living crisis start to hit consumers.

The supermarket, which has 27% of the UK grocery market, reported adjusted operating profit of £2.65 billion for the year to February 26, slightly better than expected.

Excluding banking, retail profits rose 35% to £2.6bn.

Revenue was £54.8bn for the 52 weeks ending February 26, 2022, up 2.5% on the previous year and the company has also committed to another takeover shares of £750 million by April 2023.


For the year 2022-23, the grocer expects retail adjusted operating profit of between £2.4 billion and £2.6 billion.

The supermarket giant’s huge profit surge was fueled by a 6% increase in revenue and a strong 1,025% increase in retail cash generated from operating activities.

Tesco said its performance will be influenced by three main factors, including the extent of further normalization of customer behavior post-pandemic, the level of cost inflation and its ability to partially offset it, and the the investment necessary to maintain the solidity of its tariff position.

“Clearly the external environment has become more difficult in recent months,” said Tesco chief executive Ken Murphy.

“Over the past year, we have delivered strong performance across the group, increasing our market share in all areas of our business. We have achieved this by staying focused on our customers and doing the right thing for our colleagues, supplier partners and the communities we serve.

With household budgets under pressure, he said the supermarket group was ‘laser focused on controlling the cost of the weekly shop’ and said Tesco was ‘making more products more affordable, in more places than anyone else’ .

With inflation hitting 7%, Murphy said customers were “already anticipating changes in the way they shop” and had started to “look very critically at where they spend their money”.

Own-brand products “would play an important role” in changing consumer behavior, the supermarket boss added.

During the year the supermarket extended its price matching initiative against discount rival Aldi to around 650 lines and said Aldi Price Match products are now featured in 99% of large baskets.

She also relaunched her Low Daily Prices campaign on 1,600 lines, with a clear focus on household and health and beauty products.

Murphy added: “We are confident that this approach will allow us to meet the multi-year performance framework we shared in October, driving sustainable growth and generating strong free cash flow. This confidence and our strong performance to date is reflected in the increased pace and scale of our capital repayment program, with a commitment to buy back shares worth £750 million over the next twelve months. month.

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