Tesco said it will keep its profit guidance for the year but expects profit to come in at the low end due to “continued challenges in the market”.
The retailer now expects full-year adjusted operating profit to be between £2.4 billion and £2.5 billion.
Tesco’s sales held steady in the first half of the year, but the retailer saw profits fall amid post-pandemic normalization and inflation.
Group sales rose 3.1 percent to £28.2 million over the period, while retail sales fell 10 percent to £27.7 billion
In the Republic of Ireland, where Tesco has 152 stores, sales fell 0.1 per cent year-on-year to £1.2 billion.
However, according to Tesco, sales here in the first half of the year were 12 per cent higher than in the same period before the pandemic.
The group’s adjusted operating profit was £1.3 billion for the six-month period. Operating profit for the UK and Republic of Ireland was £1.2 billion, down 11.5 per cent year-on-year.
Tesco attributed the decline to the normalization of post-pandemic shopping habits, as well as inflation and investment.
The retailer said this is particularly evident in Ireland, where the restrictions have been in place for a longer period than other markets.
Here, sales increased by 2.4 percent in the second quarter, which was due to gradually rising inflation.
Clubcard customers in Ireland rose to 300,000 during this period, with Tesco offering members of its loyalty program lower prices on some items.
Club card distribution penetration increased by 9.8 percentage points across Ireland in the first half of the year.
Tesco completed the acquisition of 10 Joyce’s stores in June but will now sell one store as a condition of clearing the deal.
“Customers look to the quality and value of our own branded ranges as they work to continue making money, whether they switch from branded products, move between categories or dine out,” said the Cork-born chief executive of the Tesco Group Ken Murphy.
He added that cost inflation is likely to remain “significant” in the second half.
“It’s still too early to predict how customers will adapt to the ongoing changes in the market,” he said.
https://www.independent.ie/business/irish/tesco-sees-full-year-profit-at-lower-end-of-guidance-42041635.html Tesco sees full-year profit at lower end of guidance