Tesco boss hits back over claims grocer has made ‘excessive’ profits
Tesco boss hits back at claims grocery has made ‘excessive’ profits as households struggle
The Tesco boss has refuted claims that the country’s largest retailer has benefited as households grapple with a high cost of living.
The supermarket giant came under fire from consumer group Which? and union Unite after raking in £2.6 billion in profits in the 12 months to the end of February this year.
Sharon Graham, Unite’s general secretary, said the results were an example of “excessive profit-seeking fueled by astonishing corporate greed.”
She was also critical of Tesco’s announcement that it would buy back a further £750 million worth of shares this year to boost investors.
‘Corporate greed’: Tesco came under fire from consumer group Which? and union Unite after raking in profits of £2.6bn in the 12 months to the end of February 2023
And Sue Davies, head of food policy at consumer organization Which?, said Tesco and its supermarket competitors could ‘work harder’ to keep grocery bills manageable.
But Tesco chief executive Ken Murphy hit back, saying it was protecting customers from the full force of ‘unprecedented’ cost pressures it was facing.
Murphy said the price increases were “significantly lower” than the 17.5 percent inflation rate for foodstuffs recorded in March by data company Kantar.
He said profits were down 7 percent and would stagnate this year as it faces “unprecedented levels of inflation” in the supply chain.
“Our profit was down 7 percent this year despite achieving record levels of cost savings,” Murphy stressed.
‘For me that is very material proof that we worked very hard for both customers and colleagues during the past financial year.’
Shareholders would agree that Tesco “got the balance right this year to make sure we were very competitive” despite the blow, he argued.
The supermarket giant admitted it was a “really tough year” for customers. The cost-of-living tightness has sent many households flocking to discounters Aldi and Lidl, putting pressure on the traditional ‘Big Four’ – Tesco, Sainsbury’s, Asda and Morrisons.
Tesco said sales rose 7.2 per cent to £66 billion over the year to February, with customers making more trips but buying fewer items.
While Tesco has retained its crown as the largest grocer, with a market share of 27 percent, Aldi and Lidl are hot on its heels
The discounters have lured customers away from mainstream retailers, with Aldi’s market share hitting a record 9.9 percent in the three months to March 19, according to Kantar.
But Tesco defended its affordable items, saying it was “the most competitive we’ve ever been.”
Although Aldi and Lidl were ‘much smaller’ than Tesco, they have ‘forced the key players to up their game,’ said Hargreaves Lansdown analyst Sophie Lund-Yates.
Tescos shares rose 0.6 percent, or 1.6 pence, to 269 pence.