Tesco, Britain's biggest retailer, has reported a 35.8% rise in annual profit but cautioned profit was likely to fall in the current year given the tough external environment.
The group, which has an over 27% share of Britain's grocery market, said on Wednesday it made retail adjusted operating profit of £2.65 billion in the year to February 26 – in line with guidance of slightly above £2.6 billion and up from £1.96 billion in 2020-21.
For the 2022-23 year it forecast retail adjusted operating profit of between £2.4 billion and £2.6 billion.
"Clearly, the external environment has become more challenging in recent months," commented Tesco chief executive Ken Murphy.
"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."
The group said that three main factors are likely to influence its performance over the coming months – increased 'normalisation of customer behaviour' as society emerges from the pandemic; the level of cost inflation that it experiences and its ability to offset that; and the investment required to 'maintain the strength of our price position' relative to the market.