Tesco workers will share £50m bonuses, but supermarket giant warns inflation will hurt profits Business News

Up to 290,000 Tesco workers will receive a pay bonus after the company revealed its annual profits had more than tripled, but the company has warned of much tougher times ahead amid the outbreak of inflation.

At the end of May, Britain’s largest private employer will pay nearly £50million in ‘thank you’ bonuses to employees of its stores, customer satisfaction and customer engagement centres, worth £1 .25% of their annual salary.

The group said the payment “recognizes how well colleagues have really tackled the challenges of the industry over the past year” and comes after raising pay to over £10 an hour.

Britain’s inflation rate hit a 30-year high of 7% in March, even before the sharp rise in utility bills in April. Soaring prices are causing the greatest pressure on household incomes since at least the 1950s.

Tesco has warned that the cost of living crisis will lead to lower profits over the coming year.

“Inflation is very real for everyone. Household spending is on the rise and finances are stretched. It has been many years since we have seen the cost of living increase at the current rate,” said Ken Murphy, the supermarket chain’s managing director.

He also said customer behavior was returning to more normal patterns as shoppers relied less on trips to supermarkets after the pandemic.

Mr Murphy said: “Clearly the external environment has become more challenging in recent months. In a difficult environment for our customers and with household budgets under pressure, we are focused on containing the cost of weekly shopping – working in close partnership with our suppliers, while doing everything possible to reduce our own costs. .”

Tesco saw its pre-tax profits climb to £2.03billion in the year to February 26, from £636million the previous year, on the back of higher sales and lower prices pandemic-related costs. It recorded a 58% rise in underlying operating profit to £2.8bn, with retail revenue up 34.9% to £2.6bn.

Profits were helped as Covid-19 costs fell to £220m from £892m the year before.

Mr. Murphy added: “Over the past year, we have delivered a strong performance across the group, increasing our share in every part of our business. “We’ve achieved this by staying focused on our customers and doing the right thing for our colleagues, our vendor partners and the communities we serve. »

A customer shops at a Tesco supermarket in east London

(AFP via Getty Images)

He said Tesco was ‘laser-focused’ on controlling the cost of the weekly store and noted cheaper own-label products would play a big role. He said Tesco was in “great shape” to weather the crisis.

Market data suggests that shoppers have started changing their shopping habits to save money, opting for more own-brand foods.

Analysts said Tesco was benefiting from its price-matching strategy at discounter Aldi across 650 key lines, the popularity of its ‘club card pricing’ loyalty program and the scale of its store network.

“Tesco has proven its ability to weather tough times ably and few people would bet against that again,” said Zoe Gillespie, chief investment officer at Brewin Dolphin.

Reuters and PA contributed to this report

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This notice was published: 2022-04-13 17:12:03

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