Tesco releases preliminary results for 2020/21

Tesco releases preliminary results for 2020/21

Tesco’s chief executive, Ken Murphy says the business is well placed to build on the momentum it has created since the start of the pandemic. He was speaking as the supermarket released its preliminary results for 2020/21, which revealed its UK online sales were £6.3billion, up 77%.

Murphy continued: “Tesco has shown incredible strength and agility throughout the pandemic.  By putting our customers and colleagues first we have built a stronger business.  I’d like to say a huge thank you to the entire team for rising so selflessly to every challenge they’ve faced. Their efforts have been truly heroic.

“We have strengthened our brand, increased customer satisfaction and improved value perception.  We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform.  Sustainability is now an integral part of our business strategy and we’re doubling down on our efforts to reach net zero.

“Our decision to protect and hold the dividend flat for this financial year demonstrates our commitment to shareholders.  We believe we can create significant further value for them and every stakeholder in our business by continuing to focus on value, loyalty and convenience for customers, underpinned by strong capital discipline.”

Key statement Tesco headlines

  • Significant role supporting customers, colleagues, suppliers and communities throughout Covid-19 pandemic
  • Sales exceptionally strong; growing UK market share in the year and gaining customers from all key competitors
  • Highest value perception in a decade; Aldi Price Match launched in March 2020 and then extended to >500 lines
  • Clubcard Prices launched in September and now extended to over 3,000 products; >two million more Clubcard app users
  • UK online sales £6.3bn, up 77%; capacity > doubled to 1.5m slots/wk; West Bromwich UFC on track, UFC #2 opens in May
  • Concluded £8.2bn sale of Asia business; £5.0bn returned to shareholders + £2.5bn one-off pension contribution
  • GHG emissions reduced 54% vs 2015 baseline; removed 1bn items of plastic; redistributed 82% of UK surplus food (+5% YoY)
  • Set for the current year; strong improvement in profitability expected whilst trading conditions likely to remain volatile

Financial highlights

  • Group like-for-like sales growth +6.3% including UK +7.7%
  • Total retail operating profit before exceptional items and amortisation of acquired intangibles £1,990m, down (14.7)%
    • UK & ROI operating profit £1,866m
    • after £(892)m UK Covid-19 costs (incl. third UK colleague bonus) and after forgoing £535m business rates relief
    • represents 11.4% growth year-on-year prior to forgoing business rates relies
  • Central Europe operating profit £124m, impacted by Covid-19 trading restrictions and Hungarian retail sales tax
  • Bank operating loss £(175)m, in line with guidance; £(295)m goodwill impairment driven mainly by increased discount rate
  • Retail free cash flow £1,187m; down year-on-year reflecting lower retail profit and last year’s £277m sale of Gain Land
  • Net debt down £0.3bn to £(12.0)bn; Total indebtedness down £1.9bn to £(13.0)bn (TIR: 3.6x, impacted by Covid-19)
  • Diluted adjusted EPS11.94p down (35.8)% reflecting lower profits
  • Proposed final dividend of 5.95pps to take full year dividend to 9.15pps – in line with last year and an exception to our policy, reflecting the importance the Board places on dividends paid to shareholders and its confidence in future cash flows

The full financial statement can be found here.

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