Tesco profits drop by 20% following covid costs

Tesco reported a 20 per cent decline in pre-tax profits to £825 million in 2020, compared to £1.03 billion in the previous year.

Profits dropped despite sales increasing by 7.1 per cent to £53.4 billion, up from £49.9 billion.

The supermarket chain said that the decline was a result of £892 million worth of covid-19 costs, including a third UK colleague bonus which was announced today, and after forgoing £535 million business rates relief.

UK and the Republic of Ireland made up £48.8 billion of group sales, up 8.8 per cent.

But Central Europe saw sales decline by 2.1 per cent to £3.9 billion.

Tesco bank an even more significant sales decline of 31.2 per cent to £0.7 billion last year, down from £1.1 billion in 2019.

“While the pandemic is not yet over, we're well-placed to build on the momentum in our business,” said Tesco chief executive Ken Murphy. “We have strengthened our brand, increased customer satisfaction and improved value perception.”

Murphy added: “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.”

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