Tesco warns of lower profits as competition heats up
Tesco has warned of lower profits in its current financial year due to intensifying competition in the UK market.
The supermarket hailed a strong performance in the year to 22 February when its group adjusted operating profit climbed by 10.9% at constant rates to £3.13 billion.
Group sales excluding VAT and fuel were also up in the period, rising by 4% to £63.6 billion.
Meanwhile. group like-for-like sales climbed by 3.1% following respective uplifts of 4% in the UK, 4.6% in the Republic of Ireland and 2.2% in central Europe.
Never Miss a Retail Update!Ken Murphy, Tesco chief executive, said: “Our continued focus on value and quality, coupled with market-leading availability, has contributed to another year of increased customer satisfaction and our highest market share for nearly a decade.
“We have invested in bringing great prices to our customers throughout the year, and continued to innovate with over 1,600 new or improved products including 400 new Finest lines, where overall sales grew 15%.
“We are also making significant progress on our long-term growth opportunities, further enhancing our digital capabilities with increased personalisation, further improvements to our online experience and an expanded retail media offering.”
Tesco said it expects group adjusted operating profit to be lower in the current year at between £2.7 billion and £3 billion, as it explained that this will give it “flexibility and firepower” to be able to respond to current market conditions,
Murphy said: “Building on our strong financial performance, robust balance sheet and positive momentum, we are setting ourselves up for the year ahead with the flexibility to continue to win in a highly competitive market.
“Despite inflationary headwinds, we are committed to ensuring customers get the best possible value by shopping at Tesco, and see further opportunities to strengthen our competitiveness. By putting customers first, we will continue to create sustainable value for every stakeholder in Tesco.”
