Tesco doubled pre-tax profits to more than £2bn last year but has warned on profits for this year as it faces a battle to “keep the cost of the weekly shop in check” amid soaring inflation driving up costs and squeezing household budgets.
Total revenues for the UK’s biggest supermarket, which proved to be a pandemic winner by taking a share from rivals and boosting online sales, rose by 6% to £61.3bn as pre-tax profits jumped from £1.1bn to £2.2bn in the year to the end of 26 February.
However, the company warned of “significant uncertainties” weighing on the business, including whether customer shopping behaviour would change as the nation moves out of the coronavirus pandemic, cost inflation, and investment to keep prices low versus budget operators, such as Aldi and Lidl.
On Wednesday, the Office for National Statistics revealed that inflation hit a three-decade high of 7% last month, and could reach a four-decade high of 10% by the end of the year.
Ken Murphy, the chief executive of Tesco, said: “Over the last year, we delivered a strong performance across the group, growing share in every part of our business.
“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.”
As a result of uncertainty in the market, Tesco broadened its forecast of profits for this year to between £2.4bn and £2.6bn – less than the £2.84bn predicted by analysts.