Tesco pledge to cut more prices
TESCO chief executive Ken Murphy has vowed to “double down” on price cuts after revealing a jump in sales.
Announcing its results yesterday, the supermarket giant revealed group sales rose 7.1 per cent to £53.4billion for the year to the end of February due to the pandemic.
Online sales in the UK surged 77 per cent to £6.3billion, as households flocked to book deliveries because of the crisis.
Last October Mr Murphy succeeded Dave Lewis, who was parachuted into Tesco in 2014 to deal with an accounting scandal and reverse a decline in the chain’s sales.
Although the new man in charge has yet to fully lay out his plans for the retailer, he suggested prices would be a key part.
Mr Murphy said: “We are doubling down on our commitment to value.”
He also singled out Tesco’s successful Clubcard scheme as an area to focus on, as it was used in 80 per cent of its sales.
Since September the number of customers using their Clubcard via a smartphone app has doubled to more than five million. Even though the pandemic sent Tesco’s sales soaring, it also left it with approximately £900million of extra costs.
This sent pre-tax profits for the year tumbling by a fifth to £825million.
It expects around a quarter of those Covid costs to continue during this year.
The retailer had to take on more staff to cope with higher demand and cover self-isolating workers. It also announced a bonus for employees.
It also repaid £535million of business rates relief that it had received from the Government.
Mr Murphy said: “Everything about this last year has been exceptional.
“Customers shopped, on average, a third less frequently, but when they did shop, their baskets were about 50 per cent bigger.”
Despite its profits fall, Tesco will maintain its full-year dividend payout at 9.15p per share to demonstrate confidence in its future prospects. The payout to investors will be worth around £707.5million.