Tesco sees boost in profits after shoppers buy more as inflationary pressures ‘lessen substantially’
Tesco’s revenue grew by 4.4 per cent for the year
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Tesco has revealed higher sales and profits over the last year as inflation pressures have “lessened substantially”.
With inflation easing, Tesco says shoppers are buying more, which means they can produce more profits.
The supermarket group posted an adjusted operating profit of £2.83billion for the year to February, up almost 13 per cent on the previous year.
Their overall revenues excluding VAT rose by 4.4 per cent to £68.2billion for the year.
The group expects to make at least the same level of profits in the year ahead as it cuts costs with new techniques.
This includes a robot-led distribution centre for fresh produce and fitting 100 stores with solar panels over the next three years.
The supermarket group posted an adjusted operating profit of £2.83billion for the year to February
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With inflation falling, the retailer was able to benefit from volume growth in their retail sales as more people were buying products. Tesco’s retail like-for-like sales grew by 6.8 per cent for the year.
This offset a 17.2 per cent drop in fuel sales driven by falling petrol and diesel prices.
In a bid to remain competitive, Tesco were also committed to cutting the prices of around 4,000 products to keep shoppers coming back.
The supermarket explained they were able to improve the value of what they were offering due to shareholder investment. This was able to increase profits over the year.
The company was among grocers to invest heavily into price improvements amid strong competition from German discount brands Aldi and Lidl.
Tesco said there were now 8,000 products with Clubcard Prices discounts each week, with the number of households holding one of its loyalty cards up 6.2 per cent to 22 million and 82 per cent of sales using one.
Ken Murphy, chief executive said: “Customers are choosing to shop more at Tesco, which is reflected in growing market share as they respond to the improvements we’ve made to the value and quality of our products.
“Inflationary pressures have lessened substantially; however, we are conscious that things are still difficult for many customers.
“So, we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year.”
Grocery price inflation in Britain has slowed to 4.5 per cent, its lowest level since February 2022.
Across Britain, £605million more was spent on promotional deals this month than in March last year, while nearly a third of baskets across Tesco, Sainsbury’s and Asda collectively contained at least one product price-matched to a discounter.
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While sales of branded goods are now growing faster than own-label, sales of supermarkets’ premium own-label lines are up by 16.1 per cent, the quickest rate in nearly three years.
This may be partly down to budget constraints easing but also points to consumers still seeking out cheaper options to big brands.
Prices are falling most rapidly on key goods such as butter and milk but rose strongly on sugary sweets and chocolate confectionery before Easter.