Tesco’s profits more than tripled last year but inflationary pressures, investment to reduce prices and an uncertain consumer environment have prompted grocers to lower their forecasts.
Tesco said that due to “significant uncertainties in the external environment” it would offer consistent operating profits in a wider-than-normal range of £ 2.4 billion to £ 2.6 billion – below the 2.8 billion consensus and even the lowest estimate of £ 2.6 billion. Analyst
Shares at Tesco rose 9p, or 3.5 percent, to 261.2p in morning trading, with Clive Black, an analyst at Shore Capital, pushing its recommendation to “hold back from buying” following a retailer’s view.
As of Feb. 26, Tesco’s 58 percent consolidated operating profit had risen from £ 1.56 billion to 8 2.82 billion. Pre-tax profits rose 186 percent from 2 532 million to 2 1.52 billion.
Non-fuel group sales rose 2.5 per cent to .8 54.8 billion from £ 53.4 billion during the period, while statutory revenue, including fuel, rose 6 per cent to £ 61.3 billion.
Strong results prompted Supermarket to raise its dividend by 19.1 percent to 10.9p and launch a ্যাক 750 million share buyback; It expects to generate £ 1.4 billion and £ 1.8 billion in retail free cash flows this year.
Ken Murphy, who took over as chief executive in October 2020, advanced his strategy to offer Tesco a “magnetic value”, expanded its Aldi Price Match initiative and introduced lower prices through the clubcard loyalty scheme. Murphy said the promotion was meant to help buyers, Britain’s largest retailers, respond to inflation “better equipped than anyone else”. He added that customers have already indicated that they are going to change their purchasing behavior and trade on the cheap self-labeled line.
As consumer families fall under increasing energy and fuel bill pressures, supermarkets are aware that losing customers is more important than ever to discount Aldi and Lidl, as happened during the credit crunch. However, keeping prices low in the face of rising inflation will require significant investment for supermarkets.
“In a difficult background for our customers and under the pressure of family budgets, we are laser-focused on controlling the cost of the weekly store – working in close partnership with our suppliers as well as doing all we can to reduce our own costs,” Murphy said.
Tesco plans to save £ 1 billion in three years. It has already closed 317 food counters and closed its Jack’s discount store formats to focus on its own supermarkets.
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Tesco said its convenient business and sales of the Booker division have recovered well and more people have returned to the office and the hospitality industry has returned from restrictions. However, while online sales were two-thirds higher than before the epidemic, some shoppers fell 6.5 percent last year as they returned to the store.
The supermarket also revealed that it had charged 193 193 million a year since it sued shareholders for its miscalculations in 2014 and paid a separate £ 119 million in cash for losses, interest and expenses to buyers in its Korean homeplus division. Following the 2015 “Legal Claim from Purchase”