Tesco, the UK's largest supermarket, has reported a significant rise in annual profits, attributing the growth to lessening inflationary pressures and cost-saving initiatives.
Pre-tax profits soared to £2.3bn, exceeding expectations and marking the highest figure in over a decade.
The company's sales increased by 7.4%, reaching £61.5bn. While growth trailed inflation for much of the year, Tesco saw a turnaround in the latter half as shoppers began purchasing more items. This resulted in a 5% share price surge on Wednesday.
Alongside financial gains, Tesco will share a £70m bonus pool with its 220,000 employees as a thank-you for their contributions.
The company also plans to maintain profit levels in the coming year through efficiency measures. These include a focus on robotics, solar energy installations, and artificial intelligence to streamline operations and reduce waste.
CEO Ken Murphy expressed cautious optimism for the year ahead, noting that inflation appears to be stabilizing. However, he acknowledged the ongoing challenges for consumers and affirmed Tesco's commitment to reducing prices.
Murphy, said he was “encouraged by signs of improving consumer sentiment” as inflation appeared to be stabilising at “low single digits” and he was “feeling quite positive” about the year ahead.
“Inflationary pressures have lessened substantially, however, we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices.”
While acknowledging strong competition from discounters Aldi and Lidl, Murphy highlighted Tesco's gains from higher-priced rivals and its newfound price advantage over Asda.