Tesco Annual Profit Fell Despite Sales Boost, Expects Fiscal Year 2022 Improvement -- Update
--Tesco made a lower pretax profit for fiscal 2021 and missed
market forecasts for adjusted pretax profit
--Revenue fell but like-for-like sales climbed 6.3% with strong
--The grocer expects improved profitability in fiscal 2022 on
lower pandemic costs
By Matteo Castia
Tesco PLC reported Wednesday a fall in pretax profit for fiscal
2021 as the coronavirus pandemic boosted costs, and said it expects
improved profitability in fiscal 2022 on lower spending.
The British grocer made a pretax profit of 825 million pounds
($1.13 billion) for the year ended Feb. 27, compared with GBP1.32
billion in fiscal 2020.
On an adjusted basis, pretax profit fell to GBP904 million from
GBP1.55 billion in the previous year, missing market forecasts
which anticipated a figure of GBP1.17 billion.
Revenue from continuing operations fell to GBP57.9 billion from
GBP58.09 billion a year earlier. Meanwhile, administrative expenses
and exceptional costs increased.
Like-for-like sales in the period increased 6.3% on the year,
including a 7.7% jump in the core U.K. market.
Tesco said it continues to gain market share in the U.K., partly
thanks to its Aldi Price Match initiative, which aims to match the
prices of items sold by the German discounter and has now been
extended to over 500 products.
The board declared a final dividend of 5.95 pence, taking the
full-year payout to 9.15 pence, flat on the year.
The company said it expects lower sales but improved
profitability in fiscal 2022 as the pandemic winds down and the
associated restrictions ease.
"Whilst we expect some of the additional sales volumes we have
gained this year in our core U.K. 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 as a result of the pandemic in fiscal 2021 will not be
repeated," the company said.
The grocer said it expects its bank division to return to
profitability in fiscal 2022, after posting an adjusted operating
loss of GBP175 million in fiscal 2021.
Tesco also said it has appointed Thierry Garnier as a
nonexecutive director with effect from April 30. Mr. Garnier
currently serves as CEO at home-improvement retailer Kingfisher
PLC. The grocer appointed Bertrand Bodson as a nonexecutive
director too, with effect from June 1.
Write to Matteo Castia at firstname.lastname@example.org
(END) Dow Jones Newswires
April 14, 2021 03:04 ET (07:04 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.