Supermarket says it has been investing in the customer offer during tough year for shoppers

Tesco has reported an increase in group sales for 2022/23, but profitability took a huge hit following cost inflation and investment in the customer offer.

The supermarket leader reported group sales excluding fuel and VAT up 5.3 per cent at £57.6 billion for the year. However pre-tax profits fell in half, from £2.03bn in 2021/22 to £1bn this year.

Retail free cash flow of £2.1bn, including working capital inflow of £468m, was ahead of expectations, it added.

Chief executive Ken Murphy said it had been “an incredibly tough year for many of our customers”, adding that Tesco’s results reflected its continued investment in delivering value and quality for customers while looking after its colleagues.

”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,” he said.

Murphy said the business had created a sustainable competitive advantage that leaves it well placed to deal with any challenges, as well as repositioning its value proposition to make it “the most competitive we have ever been”.

He also noted that Tesco has bought back over £1bn worth of shares and announced plans to acquire a further £750m over the coming year.

Looking ahead, Murphy said: ”We are pleased with our strong performance in 2022/23 and confident that we have the right strategy to keep winning. We will continue to prioritise investment in our customer offer whilst doing everything we can to offset the impact of ongoing elevated cost inflation.”