Tesco's full-year profit falls to £825m despite 77% increase in online sales

Britain's Tesco reported adjusted results on Wednesday after seeing unusually strong sales growth during the Covid-19 pandemic .

Tesco 's total retail turnover reached £1.99 billion (€2.29 billion), exceeding expectations. However, despite strong grocery sales during the Covid-19 pandemic, its full-year pre-tax profit still fell 19.7% to £825 million. This compares to a profit of £1.03 billion the previous year.

The company decided to forgo £535m of business rates relief in the UK as it was hit by £892m of Covid-19-related costs . However, operating profit fell 14.7% as the company incurred costs to adapt to the pandemic .

The retailer reported a 6.3% sales increase by group, including a 7.7% sales rise in its core UK market.

Sales in the UK and Republic of Ireland rose 8.6%, with online sales up 77% to £6.3bn, driven by capacity more than doubling year-on-year to 1.5m slots per week.

But Tesco said consumer behaviour in central Europe was different to the UK and Ireland, meaning sales in the region fell 0.6% as customers preferred to shop local and trading restrictions on general goods led to lower footfall in Tesco's larger stores.

Chief Executive Ken Murphy said: "While the pandemic is not over, we are well positioned to continue to grow our business." He said that while some additional sales would be lost as Covid-19 restrictions eased, it expected profitability and retail free cash flow to recover strongly because most of the costs of the pandemic would not be repeated.

During the pandemic, Tesco has strengthened its brand, improved customer satisfaction and enhanced value perception. Ken Murphy : " Our online business has doubled in size, and through Clubcard, we are building a digital customer platform. Sustainability has now become an integral part of our business strategy and we are redoubled our efforts to achieve net zero emissions."

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