Profits at Tesco have increased by hundreds of millions in the year it announced 400 job losses and criticised the cost of additional taxes on employers.
But the UK’s most popular supermarket – with the biggest market share – expects profits to be lower next year amid what its chief executive described as an “intensification of competition” in the UK.
Tesco’s profits rose £299m from a year earlier to £3.128bn despite cutting 400 jobs in January.
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Despite the higher profits, company boss Ken Murphy refused to rule out further job losses, saying it “would be naive” to do so.
Tesco ended the financial year with more staff than it started, Mr Murphy added.
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Such high profits, however, are expected to fall as it looks set to fight an industry price war.
Talk of a supermarket price war was sparked after Asda said it was ready to take a hit to profits to improve its offering and cut prices.
Government criticism
The strong business performance for Tesco came as the grocery chain was vocally critical of the increased employers’ national insurance contributions imposed by the government.
It is facing a £235m bill as a result of the policy, its financial results for the 2024-25 fiscal year indicated on Thursday.
Mr Murphy also reiterated his criticism of business rates, a tax on non-domestic properties, saying they have “grown exponentially” and asking the government “to really look at it” and “be fair in the way they levy their taxes”.
Spending trends
In a sign that the cost of living crisis may be receding for some, Tesco’s “Finest” line saw a sales growth of 15%.
Some products also became cheaper over the year as the retailer reported 2,300 products came down an average of 9% in price.
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More people were doing their shopping online, with those sales up 10%.
Tesco’s market share is now at a decade-long high.
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Tariffs
While businesses scramble to assess the impact of US President Donald Trump’s 10% tariffs on the UK and greater levies on China, cars and some metals, Tesco said the new taxes will have a “relatively small impact”.
“We don’t believe the impact of the tariffs are significant at this stage,” Mr Murphy told media outlets on Thursday morning.
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This is due to the fact the majority of its products come from UK suppliers and it is entering a season where that proportion increases, he said.
Though things are “moving very quickly”, and it’s “hard to know” the significance of announcements.
