Apr 14, 2021

Tesco forecasts ‘strong’ recovery after £900m hit from pandemic

Tesco said it expects a "Strong recovery" in profits in the current year after almost £900m of additional costs related to the Covid-19 pandemic held back its performance. "Whilst we expect some of the additional sales volumes we have gained this year in our core UK market to fall away as Covid-19 restrictions ease, we expect a strong recovery in profitability and retail free cash flow as the majority of the additional costs incurred . . . in the 2020/21 financial year will not be repeated," it said in a statement. Group sales in the year to February, adjusted to remove the benefit of an additional trading week, rose 7 per cent to £53.4bn, below the £58.4bn average of analyst forecasts compiled by Tesco, as the company benefited from closures in the leisure and hospitality industries and the transfer of food spending to supermarkets. Operating profit was £1.82bn, which was higher than analysts had expected but down 28 per cent on last year. Pre-tax profit fell 19 per cent to £835m. The dividend was held at 9.15p a share.

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