Tesco Reports £2bn Profit After 'Exceptionally Strong' Sales
Tesco, Britain's biggest retailer, beat its guidance by reporting total adjusted retail operating profit of £1.99 billion (€2.29 billion) after seeing "exceptionally strong" sales during the COVID-19 pandemic.
The retailer reported a 6.3% rise in group like-for-like sales, including a 7.7% lift in its core British market. UK online surged 77% to £6.3 billion as it doubled capacity to 1.5 million slots a week.
Operating profit, however, fell 14.7% as the company incurred costs in adapting to the pandemic.
In the UK and Republic of Ireland, operating profit stood at £1,866 million, while Central Europe operating profit was £124 million, impacted by COVID-19 trading restrictions and a Hungarian retail sales tax, it said.
Chief executive Ken Murphy said Tesco had shown incredible strength and agility.
'Build On The Momentum'
While the pandemic is not yet over, we're well-placed to build on the momentum in our business," he said. "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."
Tesco said that while some of the additional sales volumes would fall away as COVID-19 restrictions ease, it expected a strong recovery in profitability and retail free cash flow as the majority of the costs incurred in the pandemic would not be repeated.
"We believe we can create significant further value for them and every stakeholder in our business by continuing to focus on value, loyalty and convenience for customers, underpinned by strong capital discipline," added Murphy.