LONDON: Britain’s biggest retailer Tesco on Wednesday announced a six-fold surge in annual net profits after the supermarket giant exited Asian markets and was allowed to stay open during coronavirus lockdowns.
Profit after tax soared to £6.14 billion ($8.44 billion, 7.31 billion euros) in the 12 months to the end of February from £971 million in 2019/20.
Pre-tax profit however fell by around a fifth to £825 million, hit by the cost of employing thousands of extra staff to meet booming online demand for groceries.
Earnings were impacted also by the supermarket’s decision to repay UK government tax relief received during the pandemic.
“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business,” chief executive Ken Murphy said in Wednesday’s earnings statement.
“We have doubled the size of our online business and... we’re building a digital customer platform,” he added. Tesco said that in response to the “unprecedented increase in customer demand”, annual online sales in main market UK jumped by 77 percent to £6.3 billion.
“In terms of the outlook Tesco said it expects sales volumes to decline as lockdown restrictions ease, however costs are also expected to decline as well,” noted Michael Hewson, chief market analyst at CMC Markets UK. “This should translate into better margins, and an increase in profits (excluding exceptionals), which should head back to the levels seen last year.”
As the pandemic began to take hold in March 2020, Tesco struck a deal to sell its businesses in Thailand and Malaysia to Thai conglomerate CP Group for £8.0 billion, which massively skewed its annual performance.
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