The Tesco share price is still well below the pre-pandemic levels we saw in February 2020, despite performing very well under very difficult circumstances.
After an initially shaky start as supply chains creaked and groaned under the strain of the initial lockdown, the entire supermarket industry has been one of the unsung heroes of the pandemic, with management and staff pulling out all the stops to feed the country.
To recognize this, Tesco paid all frontline employees a 10% Christmas bonus, which at first glance was the least they could do given the payment of a special dividend to its shareholders on proceeds from the sale of their businesses in Thailand and Malaysia for £ 8.2 billion …
Today’s full year figures have shown that these higher costs, along with investments in additional capacity, are not only impacting profits, but in dealing with the challenges presented by corporate revenues. Aldi and Lidl, and its “Aldi Price Match” campaign, also had an impact on declining revenues, despite higher demand due to the pandemic.
While the group’s like-for-like sales grew 6.3%, with the UK and Ireland accounting for 6.8%, revenues including fuel were down 0.4% compared to it a year ago to £ 57.9 billion.
In terms of the outlook, Tesco said it expects sales volumes to decline as foreclosure restrictions ease, but costs are also expected to come down. This should translate into better margins and higher profits, which are expected to return to levels seen last year.