Sales at Tesco Ireland rose more than 3 per cent last year on the back of rising prices and growing market share, even as the wider group saw a decline in profit and forecast that the coming financial year would be flat.
The retailer said group profit was down 6.3 per cent in the year to February 25th, hurt, it said, by “the need to shield consumers from the full force of soaring inflation”.
But Tesco Ireland chief executive Natasha Adams said the company was pleased with a “solid” performance in Ireland in a “challenging” year.
Like-for-like sales in the Irish market were up 3.3 per cent for the full year, with the second half seeing a growth of 6.6 per cent on general market inflation. That came despite the prior year having high levels of in-home consumption as a result of hospitality restrictions.
In June 2022, Tesco acquired nine Joyce’s stores, which have now been converted to Tesco stores and reopened in the third quarter. Those contributed to an overall sales growth of 5.4 per cent at constant rates, with four new convenience stores opened during the year also adding to growth.
The retailer now has a market share of almost 23 per cent, gaining about 0.64 of a percentage point year-on-year and 1.1 percentage points against its pre-pandemic position.
“Despite inflationary challenges, we saw solid sales growth, particularly in the second half of the year, and we also delivered a very strong Christmas,” Ms Adams said.
“Customers have responded well to our investments in value and price, and this trend has continued into 2023.
“We are seeing continued growth in our online business, more customers are using our Clubcard app, and our nine new stores in Galway are trading ahead of expectations.”
The Tesco group, which reports the results from its Irish and UK-based stores as one, said it made a retail adjusted operating profit of £2.49 billion (€2.8 billion) in the year to February 25th in line with guidance of £2.4 to £2.5 billion but down from the £2.65 billion made in 2021/22.
Group sales rose 5.3 per cent to £57.6 billion.
“It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help,” group chief executive Ken Murphy said.
The group, which said it had seen “unprecedented levels of inflation in the prices we have paid our suppliers”, pledged to do everything it could to keep customer prices down.
Last month, British government forecasters estimated households there were in the midst of the biggest two-year squeeze in living standards since comparable records started in the 1950s.
UK consumer price inflation ran at 10.4 per cent in February, the most recent official data shows. In March, grocery inflation rose to a record 17.5 per cent, according to industry data.
Tesco said it was, however, benefiting from people looking to save money by cooking and entertaining at home more rather than dining out. It said fourth quarter UK like-for-like sales rose 7.6 per cent, having increased 4.3 per cent in the third quarter.
Tesco is paying a full-year dividend 10.9 pence a share, in line with the previous year, and said it would buy back another £750 million of shares over the next year. – Additional reporting: Reuters
