Tesco profits halve amid ‘incredibly tough year for customers’
Profits at Tesco halved last year to £753m in what the grocer called an “incredibly tough year for customers” as it battled “significant operating cost inflation” and wrote down the value of some properties.
The UK’s biggest retailer said sales rose 7.2% to £65.7bn in the year to 25 February, including a 3.3% increase at its UK supermarkets, but it had sold fewer items as shoppers chose carefully, to manage budgets under pressure from price rises.
Sales of food in the UK rose 4.6% in the year, led by the group’s own-label ranges, with sales of its premium Finest range up nearly 7% and its cheapest “Exclusively at Tesco” range up 6%.
However, the retailer said the volume of items sold had fallen, partly as its customers adjusted behaviour amid easing Covid restrictions, buying less to eat at home because they were visiting restaurants and cafes more often.
Sales of homewares and clothing also fell in the UK after strong lockdown-linked sales in the first part of the previous year. Online sales were down 5.4% as shoppers returned to stores as the pandemic eased. However, Tesco said its Whoosh fast-track grocery service was proving popular and now operated from 1,000 stores, 200 more than previously planned.
Sales in convenience stores and large supermarkets rose, with small shops in central London seeing the fastest growth – at 9.4% – reflecting the return to office-working in the capital.
Profits were hit by a £982m write-down on the value of properties and the £138m cost of restructuring, which included hundreds of job cuts when the retailer shut down its fresh food counters in stores.
Ken Murphy, the chief executive of Tesco, which owns the Booker grocery wholesaler and runs stores in eastern Europe and Ireland as well as the
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