Tesco profits take Covid hit

Tesco said profits tumbled by around a fifth in the past year after Covid costs close to £900 million offset surging sales.

The supermarket giant said yesterday that pre-tax profits slid to £825m for the 12 months to February, compared with £1.03bn the previous year.

It said profits were weighed down by £892m Covid-related costs and the decision to hand £585m in business rates relief back to the government.

The bumper bill of pandemic costs was driven by hiring staff to cover workers affected by Covid and on safety in stores.

Tesco hired almost 50,000 temporary workers during the pandemic, about 20,000 of whom have joined permanently.

It had benefited from a jump in demand for groceries during the pandemic, with more meals eaten at home and changes to working habits.

Group sales excluding fuel increased by 7% to £53.4bn for the year, buoyed by online sales.

Online sales jumped by 77% to £6.3bn in the UK as the company doubled delivery capacity to housebound customers.

The group said it has put significant investment into keeping prices low to match discount rivals, launching its Aldi Price Match campaign last year.

It said it has made progress in the “value perception” as a result.

Chief executive Ken Murphy said: “Tesco has shown incredible strength and agility throughout the pandemic. By putting our customers and colleagues first, we have built a stronger business.

“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business.

“We have strengthened our brand, increased customer satisfaction and improved value perception.”

Donald Brown, senior investment manager at Brewin Dolphin, said: “Tesco’s results reflect the sometimes tricky position that supermarkets found themselves in over the last year. Although they have largely been able to trade through the last 12 months, this has come with significant extra costs.

“The dividend remaining protected, albeit unchanged from last year, is a positive sign and suggests management are relatively confident in the mediumterm outlook.”

Shares in the company moved 3.1% lower to 224.9p in early trading.

Recently released figures showed that, across all retailers, grocery sales in

the UK rose 7.4% in the 12 weeks to March 21, in a marked slowdown compared with previous months. The research, by Kantar, also revealed a 3% fall in sales in the four weeks to March 21, compared to a year earlier – the first comparison with the first national lockdown that saw supermarket

shelves stripped bare by panic buying.

Kantar said the figures showed shoppers made 117m fewer trips to supermarkets last month than in March 2020.

Iceland saw the strongest growth in the three-month period, excluding onlineonly Ocado, with a jump in sales of 14.3%. Aldi was the

worst performer, growth of 1.5%.

Tesco increased its sales by 8.5% and once again gained share to capture 27.1% of the market, up 0.3% compared to the same quarter last year.

Online sales slowed in the four weeks to March 21, with signs shoppers are returning to physical shops. with

BALANCED: Tesco gave £585m in business rates relief back to the government.