Tesco’s preliminary profits have more than tripled as boss Ken Murphy hails the grocer’s “strong performance” and says the chain is better placed than its rivals to tackle the looming cost of living crisis for shoppers.

Tesco store

Tesco has given guidance for its current financial year of ‘retail adjusted operating profit of between £2.4bn and £2.6bn’

Tesco recorded a 219.7% surge in pre-tax profit to £2bn in the 52 weeks to 26 February 2022. Adjusted operating profit climbed 58% to £2.8bn during the financial year, and group sales excluding VAT and fuel rose 2.5% to £54.7bn.

Overall revenue increased 6% in the year to £61.3bn, driven by a 0.4% uplift in like-for-like sales across the group’s UK arm, up 8.2% on a two-year basis. Overall, retail like-for-like sales increased 2.3% and 8.3% on a one and two-year basis respectively.

Tesco’s online sales comprised 34.8% of overall sales during the year, and the grocer’s overall market share increased across all its territories and was up 30 basis points to 27.7% in the UK.

As a result of this strong performance Tesco has proposed a 19% year-on-year uplift in its final dividend.

Chief executive Ken Murphy said: “Over the last year, we delivered a strong performance across the group, growing share in every part of our business.  We did this by staying focused on our customers and doing the right thing for our colleagues, our supplier partners and the communities we serve.

“In October, we shared the four strategic priorities that will help us to stay competitive, accelerate our growth and ensure that we can sustainably generate strong levels of retail free cash flow.  We have already made good progress: our value perception is the strongest it has been for many years; we are building deeper relationships with more customers through the digitisation of Clubcard; and we are serving more customers wherever, whenever and however they want through more convenience stores, more than 100 new Click & Collect sites and the launch of Tesco Whoosh.”

The supermarket chain, which also introduced its highest pay rise in a decade earlier this month, has extended its Aldi Price Match range to 650 lines in the year, as well as relaunching over 1,600 lines on Low Everyday Prices.

Murphy said that Tesco is “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. 

“Through our powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices, we are making more products more affordable, in more places than anyone else.”

Tesco has given guidance for its current financial year of “retail adjusted operating profit of between £2.4bn and £2.6bn”.

Tesco said this forecast accounted for the normalisation of customer behaviour post-Covid, as well as the cost of inflation and any resulting investments it would need to make on price.