Tesco Full-Year Report 2023
Ken Murphy, Chief Executive
“This strong performance reflects the hard work of colleagues across the whole Tesco Group and their commitment to serving our customers. Customers are choosing to shop more at Tesco, which is reflected in growing market share as they respond to the improvements we’ve made to the value and quality of our products.
Inflationary pressures have lessened substantially, however, we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year. We have continued to invest in helping customers where it matters most, cutting prices on more than 4,000 products and doubling down on our powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices. Customer perception of the quality of our products is growing ahead of the market and we continue to win customers from premium retailers, with sales of Tesco Finest now exceeding £2bn.
Highlights
- Strong sales performance across the Group, with Retail LFL8 sales up 6.8%; inflation fell throughout the year, with volume growth in the UK and Republic of Ireland across the second half
- UK & ROI LFL sales up 7.3%, including UK up 7.7%, ROI up 6.8% and Booker up 5.4%
- Central Europe LFL sales up 0.2% in a challenging trading environment, with our investments in value supporting an improving volume trajectory during the second half
- Statutory revenue £68,187m, up 4.4%, includes impact of (17.2)% lower fuel sales, primarily due to reduced retail prices
- Retail adjusted operating profit5 £2,760m, up 10.9% at constant rates, including Save to Invest delivery of c.£640m
- UK & ROI adjusted operating profit £2,670m, up 15.7%, as a strong trading performance and accelerated cost savings offset significant cost headwinds and our investments in value, quality and service
- Central Europe adjusted operating profit £90m, down (50.0)%, primarily driven by cost inflation headwinds and regulatory actions in Hungary
- Statutory operating profit1 £2,821m, up 100.1%, reflects last year’s £(982)m non-cash impairment charge compared to a £28m net release this year
- Strong retail free cash flow6 £2,063m, including a positive working capital inflow of £418m
- Net debt6,7 reduced by £729m due to strong cash flow and Bank special dividend of £250m; net debt/EBITDA ratio at 2.2x
- Supporting returns to shareholders through ongoing buyback programme; £750m of shares purchased during 23/24
- Proposed final dividend of 8.25pps, with full year dividend of 12.10pps, up 11.0% year-on-year