Tesco says price pressures easing as profits soar

tesco-says-price-pressures-easing-as-profits-soar
Tesco says price pressures easing as profits soar

Tesco, the UK’s largest supermarket chain, has reported strong sales and profits for the past year as grocers’ price pressures ease. Pre-tax profits rose to £2.3bn from £882m, with sales up 4.4% to £68.2bn in the year to 24 February, the company reported. Tesco has been “working hard” to reduce prices, and promotions such as Aldi Price Match and Clubcard offers doubled, said CEO Ken Murphy. By the end of the year, the company has seen price reductions on over 4,000 products by an average of 12%, it added. Mr Murphy expects food inflation to stabilise in the low single digits for the rest of the year, but some cost increases may be “sticky,” he said. The chain was accused of “raking in mountains of cash while families struggle to put food on the table because of sky-high prices” by the Unite union’s general secretary, Sharon Graham.

According to Bloomberg Intelligence’s global retail analyst, Charles Allen, Tesco has made considerable progress in keeping up with its competitors, such as Aldi and Lidl, by offering very competitive pricing to lure cost-conscious shoppers, though its recent results were just slightly weaker than anticipated. Tesco is the UK’s largest supermarket chain, with more than 330,000 employees and a 27.3% share of the grocery market. Its CEO said that the company’s share is growing as customers “respond to the improvements we’ve made to the value and quality of our products.” In the coming year, with rising staff bills and inflation declining in the UK, Allen expects things to remain tough for Tesco, which has been taking specialist counters out of its shops, cutting costs and making the company more appealing to a wider range of customers.

The company had hoped to sell its Asian supermarket business last year, suspending the process after receiving bids from potential buyers, including private equity firms. It is now focusing on investment in online services, including food deliveries and plans to open stores under the One Stop banner. Previous moves that helped Tesco weather the economic fallout from Covid-19 include starting a full-time job guarantee program for young people, and employing 16,000 new employees to help with increased demand.

For customers looking to save money on their food shop, Tesco recommends checking what is already in the cupboard and heading to the reduced section first, as well as looking at items close to their best-before date that are usually cheaper and can be frozen

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