by James Davey and Paul Sandle

LONDON (Reuters) – Britain’s biggest retailer Tesco expects profit to be stable in its new fiscal year, after a 6.3% drop in 2022-23 as high inflation hurt customers and suppliers.

Tesco, which has a 27% share of the UK grocery market, has weathered this difficult environment better than its rivals by using its leverage to secure better terms from suppliers and retaining customers through a loyalty program advantageous.

In 2022-2023, its sales increased by 5.3% to reach 57.6 billion pounds (65.4 billion euros), driven by rising prices – British inflation having reached 11.1% in October, its highest level in 40 years.

However, rising wages and bills weighed on earnings. Its adjusted operating profit from distribution activities reached 2.49 billion pounds for the year ended February 25, after 2.65 billion a year earlier.

This operating profit should be stable in 2023-2024.

On the London Stock Exchange, the Tesco title rose in the morning by nearly 2%.

“Tesco continues to consolidate its position as the UK’s leading supermarket,” said Zoe Gillespie, chief investment officer at RBC Brewin Dolphin. “Earnings may be down, but that was to be expected due to pressures from the cost of living crisis and the normalization of shopping habits post-pandemic.”

(Report James Davey; Nathan Vifflin, edited by Blandine Hénault)

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