Tesco profits

[Gofer Blue]

I’m not a fan of Tesco. I don’t like their stores, their meal deals or their clubcards. Shirley Porter’s big council house sell-off for votes still rankles.

However they are making about 3p profit on every £1 of sales. That is not a rip-off or profiteering. Prior to the pandemic most supermarket chains made 2-4% profits on revenue before tax and that had been the case for decades.

Selling food is similar to selling fuel for vehicles. It’s an absolute necessity and if your prices are a bit too high then the consumer will shop elsewhere. That’s why margins are so low compared to, say, tech. Apple, for example, makes annual profits of around $170 billion on sales of $380 billion.

Please explain how an increase in sales of 4.4% can lead to pre-tax profits increasing from £882 million to £68 billion?

[blue sky]

Please explain how an increase in sales of 4.4% can lead to pre-tax profits increasing from £882 million to £68 billion?

The explanation is in the BBC article in the OP. ‘Price pressures’ hit margins. Tesco has contracts with growers and suppliers and would have seen its margins squeezed as food price inflation hit 20% in late 2022/early 2023. These latest figures are a return to normal profitability, as you can see in this link from Tesco itself.

https://www.tescoplc.com/investors/r...e-year-record/

I walk/drive past Tesco to shop at Morrisons. I don’t like Tesco’s links to the Tories or their borderline fraudulent deals, or their data-collecting clubcard. They were pioneers of these manipulation techniques and I can’t abide the company.

But as I wrote yesterday, profiteering is very difficult in the grocery business as there are at least 10 large food retail companies in the UK who mainly compete on prices.