- Tesco PLC on Wednesday said it saw annual profit rise following a ‘strong performance’ during the period, leading to the launch of a new £750 million share buyback.

However, shares in the supermarket chain were trading 5.7% lower at 255.10 pence in early trade as it warned of a hit to profit in the year ahead amid inflationary pressures and normalising consumer behaviour post-pandemic.

‘Clearly, 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,’ said Chief Executive Ken Murphy.

In the year to February 26, pretax profit ballooned to £2.03 billion from £636 million the year prior.

Revenue rose 6% to £61.34 billion from £57.89 billion, as group sales increased 2.5% to £54.77 billion from £53.45 billion.

Like-for-like sales in the UK & RoI were up 2.2%, with group retail sales advancing 2.3%.

Tesco declared an annual dividend of 10.90 pence, rising from the 9.15p distributed the year before. Alongside this, the firm will buyback £750 million worth of shares over the next twelve months.

For financial 2023, Tesco is guiding for retail adjusted operating profit between £2.4 billion and £2.6 billion - which would be below the £2.65 billion registered in financial 2022. It gave the guidance ‘in the form of a wider than usual range’ to reflect the uncertainties facing the business, such as inflation and normalising customer behaviour.

‘Over the last year, we delivered a strong performance across the group, growing share in every part of our business. We did this by staying focused on our customers and doing the right thing for our colleagues, our supplier partners and the communities we serve. I want to thank all of our colleagues who did a brilliant job navigating the ongoing pandemic, dealing with the supply chain challenges in the industry and tackling the onset of increasing inflation,’ said CEO Murphy.

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