Tesco quarterly figures still show big profits
Poor old Tesco. Today Tesco PLC’s Preliminary Results 2022/23 were published. Its profits before tax are down 7.1% on the same time last year. Don’t feel too sorry for it though. It still managed a profit of £2.6 billion for the financial year to 25 February 2023. It also recorded group sales of £57.7bn for the year, representing an increase of 5.3% from the previous year.
And shareholders seem to be doing OK too. The company proposes a final dividend of £7.05 per share, to take the full year dividend to £10.90 (in line with last year), worth £516 million in June, with the company also announcing plans for a buyback of its shares worth £750 million.
Chief executive Ken Murphy said of the results: “It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help.” He also says that “This is despite unprecedented levels of inflation in the prices we have paid our suppliers for their products, and the cost of running our own operations.”
Well, how nice of him to acknowledge the fact that the cost of living crisis has hit people hard and no less so than in their grocery shopping. But let’s look at the inflation issue.
In January this year MailOnline reported Tesco hikes price of a tin of Heinz tomato soup by 79% – up from 95p to £1.70 – within space of six months, despite supermarket’s pledge not to pass on ‘unjustifiable’ cost increases
If Tesco were only inflating prices to incur costs they were facing then surely this would not be the case?
As I told MailOnline at the time “Not one thing in the chain has gone up by 78 per cent, so how is putting up the cost of a tin of soup 78 per cent over six months appropriate and reflective of costs? Inflation is high but it’s not at 78 per cent. I think this reflects very badly on Tesco and shows the importance of comparing prices across supermarkets if you can.”
Another MailOnline investigation uncovered the quiet cutbacks your favourite brands are making that leave hard-pressed families with inferior products. It found:
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- Tesco Finest fish pie, with a sixth less fish, has gone up by 50p to £4
- Shloer has 37 per cent less grape
- Covent Garden chicken soup has reduced its key ingredient by 17 per cent
- Beef in Knorr stock cubes has been cut by a quarter, and gone from beef extract to beef fat
Retail expert Sarah Coles, from financial services firm Hargreaves Lansdown, said: ‘It’s cynical. Producers are saving millions of pounds a year with this tactic. Shoppers should definitely know about this practice.””
In February 2023, food inflation was 18.2%.Interviewed on Radio 4’s Today programme in March, The Bank of England boss, Andrew Bailey, urged businesses not to raise prices, commenting “I would say to people who are setting prices – please understand if we get inflation embedded, interest rates will have to go up further and higher inflation really benefits nobody.”
He emphasised “It hurts people, and it particularly hurts the least well off in society.”
Which? is campaigning for “supermarkets to commit to clear pricing, better access to budget ranges that enable healthy choices and more offers for those who need them most”. You can sign their petition here.
Which? publishes a monthly food inflation tracker. It details the supermarkets and types of food and drink with the fastest rising prices. It throws up some interesting statistics, such as own-brand labelled products rising at a higher rate than branded. Butters and spreads rose by 27.3% in the quarter up to February 2023, milk 26.2% and cheese 24.1%.
A petition on 38 Degrees calling for Supermarkets: stop profiteering and lower your prices! received about 35k signatures within hours of the announcement,
And what of future profits for the poor supermarket and its shareholders? Well, I imagine the introduction on the 2nd May of a minimum spend up from £40 to £50, to qualify for free delivery, will help profits.
I am sure I am not alone in wanting to see less greed and more understanding and compassion from the supermarkets. People are really struggling with their household budgets. Whilst, of course, supermarkets need to make a profit, do they not also have a moral duty to look after their customers as much as their shareholders?
Unite Union also criticised the supermarket giant. Tesco accused of ‘rampant profiteering’ as ‘obscene’ profits published.
Some years ago I regularly challenged the then Tesco Group CEO, Dave Lewis. He listened to customers and saw profits rise. Having gathered questions from customers, I undertook an exclusive interview with Matt Davies, the Tesco UK CEO, and Dave Lewis, the only one they did together. See all my interactions with Tesco here: Case study: Tesco and a consumer champion.
But it would appear that the current Tesco leadership no longer wants to listen to customers. All my own requests to Tesco to answer questions from customers have been ignored. Why? Just why is Tesco so reluctant to respond to its customers?
Could it be that it just doesn’t want the challenge, so refuses to listen, acknowledge, be transparent and change for the better?
Edit update 15 May 2024
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Tesco CEO pay – a shocking increase!
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