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Tesco profits dive 20% despite surge in grocery sales

// Tesco’s pre-tax profits fell by almost 20% to £825 million
// It said profits were weighed down by £892 million in Covid-related costs
// The grocer took a £535m hit on business rates relief handed back to the government

Tesco has revealed that its pre-tax profits tumbled by almost 20 per cent to £825 million over the past year, despite unveiling a jump in sales during the pandemic.

The grocer stated that coronavirus related costs of almost £900 million offset surging sales.

Tesco chief executive Ken Murphy said: “Tesco has shown incredible strength and agility throughout the pandemic.”

The big 4 grocer said on Wednesday morning that pre-tax profits slid to £825 million for the 12 months to February, compared with £1.03 billion the previous year.

It said profits were weighed down by £892 million in Covid-related costs and the company’s decision to hand £585 million in business rates relief back to the Government.

“By putting our customers and colleagues first, we have built a stronger business,” said Murphy.

“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business.

“We have strengthened our brand, increased customer satisfaction and improved value perception.”

Despite the losses, Tesco did benefit from rising demand for groceries during the pandemic, as shoppers stayed indoors amid restrictions on the hospitality sector and working from home measures.

Online sales jumped by 77 per cent to £6.3 billion in the UK as the supermarket group doubled delivery capacity to meet rising demand from housebound customers.

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