Tesco sees profits treble but warns of soaring inflation costs

Tesco has revealed its pre-tax profits more than doubled to more than £2bn, up from £636m last year, for the year ending February 26, but warned of “significant uncertainties” and said performance would be affected by the investment needed to keep prices down.

Meanwhile, total revenues jumped by 6% from £57.9bn to £61.3bn, and group sales excluding VAT and fuel rose 2% from £53.4bn to £54.7bn.

However, the grocer has warned of future uncertainties on the back of latest inflation figures. ONS reported that inflation hit a three-decade high of 7% last month, and could hit a four-decade high of 10% by the end of the year.

Amid this uncertainty, Tesco has been conservative with its forecast for the coming year, with its guidance for the 2022/23 financial year for a retail adjusted operating profit between £2.4bn and £2.6bn.

Chief executive Ken Murphy said: “Over the last year, we delivered a strong performance across the Group, growing share in every part of our business. We did this by staying focused on our customers and doing the right thing for our colleagues, our supplier partners and the communities we serve.

“Clearly, the external environment has become more challenging in recent months. Against a tough backdrop for our customers and with household budgets under pressure, we are laser-focused on keeping the cost of the weekly shop in check – working in close partnership with our suppliers, as well as doing everything we can to reduce our own costs.”

He added: “We are confident that taking this approach will enable us to deliver on the multi-year performance framework we shared in October, driving sustainable growth and generating strong retail free cash flow.

“This confidence, and our strong performance to date is reflected in the increased pace and scale of our capital return programme, with a commitment to repurchase shares worth £750m over the next twelve months.”