Pre-tax profits at Tesco fell almost 20 per cent to £825 million in the 12 months to the end of February as the supermarket group handed back £585 million of business rates relief granted at the height of the Covid-19 crisis.
Operating profit over the period fell 21.3 per cent to £1.73 billion, down from £2.2 billion, as revenue slipped a fraction to £57.9 billion.
“Tesco must be frustrated at the fact it has pulled out all the stops to serve the nation during the pandemic, yet earnings have gone into reverse,” says Russ Mould, investment director at AJ Bell.
“Falling profit reflects the significant extra costs it has had to stomach to keep shelves stocked, staff and customers safe in-store, and additional capacity to service ferocious online demand.
“There hasn’t been a bigger live stress as that experienced by supermarkets over the past 13 months and Tesco and others will have learned valuable lessons in how to operate under intense pressure.
“That should provide benefits in the longer term, but for now Tesco shareholders will have to make the most of the small bone they’ve been thrown. The supermarket’s decision not to cut the dividend despite falling profits is a small token of its thanks, but some investors will no doubt still feel disappointed.”