SUPERMARKET giant Tesco saw its pre-tax profits plunge 51% to £1 billion as it dealt with soaring costs and customers cut back amid the cost of living crisis, with the group’s chief executive Ken Murphy admitting “it’s been an incredibly tough year”.

The UK’s biggest supermarket, which has 27% of the UK grocery market, said that while sales rose 7.2% to £65.7bn in the year to February 25, 2023, including a 3.3% increase at its UK supermarkets, it had sold fewer items as shoppers chose carefully, to manage budgets under pressure from price rises.

It said adjusted operating profit, excluding petrol, will be “broadly flat” in this financial year as it revealed profits fell 6.3% to £2.4bn in the year to February 25. This was in line with expectations. The sharp fall in pre-tax profits was largely attributed to a big write-off in the value of its property portfolio.

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Tesco noted that it had faced “unprecedented” increases as suppliers hiked their prices but had “fundamentally repositioned our value proposition” to help under-pressure customers. “It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help,” Mr Murphy noted.

“Our results reflect our continued investment in delivering great value and quality for our customers, while at the same time looking after our colleagues. This is despite unprecedented levels of inflation in the prices we have paid our suppliers for their products, and the cost of running our own operations.”

He pointed to the retailer’s “resilience and agility” developed over the last few years, stating: “[This] has created a sustainable competitive advantage that leaves us well-placed to deal with any challenges that may arise.

“It has enabled us to deliver another strong performance across the group, while continuing to make strategic progress.

“Perhaps, most importantly, over the last few years we have fundamentally repositioned our value proposition. We are the most competitive we have ever been, with our market-leading combination of Aldi Price Match, Clubcard Prices and Low Everyday Prices changing the way customers perceive value at Tesco.”

Led by the group’s own-label ranges, Tesco’s UK food sales increased 4.6%, with sales of the premium “Finest” range up nearly 7% and its budget “Exclusively at Tesco” range up 6%.