Britain's biggest retailer Tesco has forecast flat profit in its new financial year as it reported a 6.3% fall for 2022-23, hurt by not passing on to consumers the full rise in the cost of inflation it had faced.
The group said on Thursday it made retail adjusted operating profit of £2.49 billion (€2.8 billion) in the year to 25 February versus guidance of £2.4 (€2.7 billion)-£2.5 billion (€2.8 billion) and the £2.65 billion (€3.01 billion) made in 2021-22.
Ken Murphy, chief executive said, "It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help. Our results reflect our continued investment in delivering great value and quality for our customers, whilst at the same time looking after our colleagues.
"This is despite unprecedented levels of inflation in the prices we have paid our suppliers for their products, and the cost of running our own operations."
The company's retail like-for-like sales increased 5.1% as volumes held up relatively well despite cost-of-living pressures and some further post-pandemic normalisation.
Like-for-like sales in the UK and Ireland grew by 4.7%, with both the UK and Ireland registering growth of 3.3% growth and Booker seeing a 12.0% increase. In central Europe, like-for-like sales were up 10.4% year-on-year.
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The retailer said it recognised the pressures its suppliers were facing from rising costs but it was not afraid to have 'direct conversations' about delivering value for its customers.
"We've worked closely with our suppliers to provide them with the support they need at this critical time," chief executive Ken Murphy told reporters on Thursday.
"However, at a time when we have been focused on mitigating the impact of inflation, we also haven't been afraid to have direct conversations when necessary in the interest of our customers."
The retailer forecast retail free cash flow within its target range of £1.4-£1.8 billion and adjusted operating profit of £130-£160 million pounds for its bank division.
'We are...confident that we have the right strategy to keep winning,' it said in a statement, adding, 'We will continue to prioritise investment in our customer offer whilst doing everything we can to offset the impact of ongoing elevated cost inflation.'
Focus On Value
According to Murphy, British consumers will maintain a focus on value in 2023 as they continue to battle inflation.
"The consumer trends that we would expect to see continue in 2023 is that (shoppers) will continue to look for competitive prices and value very closely," he told reporters after Tesco reported results for its 2022-23 year.
Consumers would also continue the measures they took last year to economise when the cost-of-living crisis kicked in.
"The trend of them having more staycations (and) eating in more often will continue and persist through the summer," he said.
He added that he expected consumers to continue trading down to less expensive meat, such as chicken instead of beef, and doing more batch cooking.
News by Reuters, additional reporting by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.