Tesco, the UK’s largest supermarket chain, said it would struggle to increase profits this year amid “unprecedented levels of inflation” across its supply chain.
Chief executive Ken Murphy said the group has been grappling with “unprecedented levels of inflation in the prices we have paid our suppliers for their products” as it seeks to stay competitive on price.
Retail adjusted operating profit will be “broadly flat” this financial year, Tesco said on Thursday, as it disclosed that the measure of profits fell 6.3 per cent to £2.4bn in the year to February.
It has invested in several initiatives such as matching discount chain Aldi on prices to prevent shoppers from defecting to rivals.
The group’s full-year sales climbed 5.3 per cent to £57bn. Including fuel, revenue rose 7.2 per cent last year to £65.7bn.
Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “While profits are expected to be flat for the year ahead, the continuation of its share buyback scheme and strong execution of its strategy mean Tesco remains in good shape.”