Tesco has said it is “laser-focused” on keeping price inflation in check and is working in partnership with suppliers to cut costs.
In preliminary results for 2021-22 the supermarket said pretax profits grew to £2.03bn in the year to 26 February, up from £636m last year.
The company warned “significant uncertainties” were weighing on the business, including uncertainties surrounding customer behaviour as the country exits the pandemic, inflation, and investment to keep prices prices competitive against rivals including Aldi and Lidl.
Ken Murphy, chief executive of Tesco, said: “The external environment has become more challenging in recent months.
“Against a tough backdrop for our customers and with household budgets under pressure, we are laser-focused on keeping the cost of the weekly shop in check – working in close partnership with our suppliers, as well as doing everything we can to reduce our own costs.”
The company’s sales in the UK increased by 2.3% year-on-year to £50m due to rising sales in the pandemic, while group sales – excluding fuel – grew by 2.5% to £54.8m.
Tesco said Covid-19 and cost-of-living pressures had a “significant impact on the UK economy” and there remained a “large degree of uncertainty around the scale and stress of the peak of the economic downturn and the speed and shape of any subsequent recovery”.
The company continued: “While there has been significant recovery observed in the wider economy, the degree of uncertainty remains high.”
The supermarket further said it was monitoring the impact of Russia’s war in Ukraine on its supply chains and costs.
Tesco said while it does not have any operations in Ukraine or Russia, it said it does have operations in Hungary and Slovakia, both of which border Ukraine.
It said: “The group is therefore not directly affected by trading restrictions or sanctions, but could be affected in future by possible wider macroeconomic consequences should the situation develop further.”
This could include an increase in domestic inflation from supply chain disruption, commodity shortages or commodity price increases affecting cash flows, or changes in market discount rates and valuations.
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