Tesco full-year sales climb, profits dampened by rates relief return

Tesco has recorded a 20% fall in pre-tax profit to £825m in the 52 weeks to February 27, a decline the retailer attributed to forgoing £535m of business rates relief.

The supermarket giant said its UK and ROI operating profit of £1.86bn represented an 11% uplift year on year prior to returning its rates relief.

Tesco’s full-year sales excluding fuel rose 7% year on year on a constant currency basis to £53.4bn, up 6.3% in like-for-like terms.

The supermarket’s UK and ROI sales increased 8.6% during the period to £48.8bn, with UK sales climbing 7.7% in like-for-like terms.

Tesco’s online sales hit £6.3bn during the financial year, up 77% as the grocer doubled its online fulfilment capacity to 1.5 million slots per week. 

The supermarket incurred £892m in Covid-19-related costs across its UK business during the financial year, which the retailer said set it up for “a strong recovery in profitability” in its current financial year as the majority of costs incurred would not be repeated.

The grocer focused heavily on price during the financial year, having launched Clubcard Prices in September, which now extends to over 3,000 products and resulted in an uplift of two million additional Clubcard users, as well as launching an Aldi Price Match scheme in March that covers 500 lines.

Tesco chief executive Ken Murphy hailed the supermarket staff’s “heroic efforts” over the course of the pandemic.

“While the pandemic is not yet over, we’re well placed to build on the momentum in our business,” he added.

“We have strengthened our brand, increased customer satisfaction and improved value perception. We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform. Sustainability is now an integral part of our business strategy and we’re doubling down on our efforts to reach net zero.”

Alongside its full-year results Tesco bolstered its non-executive board with two new appointments – Kingfisher boss Thierry Garnier, and Novartis chief digital officer and former Sainsbury’s Argos digital and marketing boss Bertrand Bodson.

As well as sitting on the non-executive board from April 30 and June 1 respectively, Garnier will join Tesco’s remuneration committee and Bodson will join the corporate responsibility committee.