Tesco has posted a fall in profit for the full financial year and forecasts flat profits in FY 23/24 as a result of “unprecedented levels of inflation”.

Exterior of Tesco Halifax store

Tesco posted a fall in adjusted retail operating profit of 6.1% in the year to February 

The UK supermarket giant posted a fall in adjusted retail operating profit of 6.1% to £2.49bn in the year to February, versus the £2.65bn it made in 21/22, as it shielded shoppers from rising inflation. 

Tesco reported a 5.3% increase in group sales year on year to £57.6bn, up from £54.7bn previously. The retailer attributed its resilient sales performance to volumes holding up “relatively well” despite the cost-of-living challenges.

Tesco said in a statement that it had focused on its “most competitive offer ever” as it continued its Aldi Price Match, Clubcard offers and Low Everyday Prices initiative to help “mitigate inflation and drive value perception ahead of the market”. 

The grocery giant also highlighted its “biggest ever investment in pay” during the year as it increased hourly pay for UK store colleagues to £11.02, as well as providing additional staff benefits.

Tesco said it remains confident that it has “the right strategy to keep winning”. In terms of outlook, the retailer said it will prioritise investing in its customer offer as well as attempting to relieve the impact of rising inflation for shoppers.

Tesco chief executive Ken Murphy said: “It’s been an incredibly tough year for many of our customers and we have been determined to do everything we can to help.

“Our results reflect our continued investment in delivering great value and quality for our customers, while at the same time looking after our colleagues. This is despite unprecedented levels of inflation in the prices we have paid our suppliers for their products and the cost of running our own operations.

“I am very proud of the way the Tesco team has responded to these challenges and would like to thank every colleague for the contribution they have made.

“The resilience and agility that we have developed over the last few years has created a sustainable competitive advantage that leaves us well-placed to deal with any challenges that may arise. It has enabled us to deliver another strong performance across the group, while continuing to make strategic progress.

“Perhaps most importantly, over the last few years, we have fundamentally repositioned our value proposition. We are the most competitive we have ever been, with our market-leading combination of Aldi Price Match, Clubcard Prices and Low Everyday Prices changing the way customers perceive value at Tesco.”

Tesco also announced a price-lock on more than 1,000 of its everyday products earlier this week, which includes cutting the cost of milk for the first time since May 2020, both in store and online.

The supermarket giant has reduced the cost of its most popular four-pint bottle from £1.65 to £1.55, with the price lock being in place until July 5 in an attempt to continue “providing great value on family staples” amid the cost-of-living crisis.

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