Sales at Tesco stores in the Republic fell by 0.1 per cent during the first half of 2022 when compared with the same period last year, but were still in advance of pre-pandemic levels, the group’s latest set of results show.
In half-year results published by the UK supermarket giant on Wednesday, the group said it now expects full-year retail-adjusted operating profit of between £2.4 billion (€2.8 billion) and £2.5 billion (€2.9 billion), at the lower end of the range it announced earlier this year.
Tesco’s share price is down close to 30 per cent this year, with investors betting against the supermarket giant as it navigates the worst cost-of-living crisis in a generation.
The group said on Wednesday that it is facing “ongoing changes” in its British and Irish markets with “cost inflation [remaining] significant” in the first half of the financial year and “post-pandemic normalisation” of consumer behaviours.
Overall, group adjusted operating profit from its retail operations topped £1.2 billion in the first six months of the financial year — down 10 per cent from almost £1.4 billion in the same period last year when Covid restrictions were still in place across Britain and Ireland.
Tesco Ireland chief executive Natasha Adams said she was happy with the business’s performance “despite ongoing market challenges”.
“Our value proposition is resonating well,” she said.
“The increased cost of living is placing a burden on many families,” Ms Adams added. “We continue to work collaboratively with suppliers and partners to ensure that we are supporting our customers in all that we do.”
While Tesco’s year-on-year sales in the Republic declined 0.1 per cent from the first half of 2022, they remained 12.1 per cent in advance of pre-pandemic 2019 at close to £1.3 billion.
“The Covid-19 impact on the base was particularly strong [in the Republic] with restrictions in place for a longer period than in other markets. In the second quarter, the effects of the Covid-19 unwind on volumes year-on-year eased, and sales grew by 2.4 per cent,” Tesco said. “This also reflected a gradual increase in inflation in the market.”
The group said it had “increased its value proposition” by completing the roll-out of its Aldi Price Match programme and that customer engagement with Clubcard price offers had been “strong”, leading to an almost 10 per cent increase in Clubcard sales penetration.
Tesco also completed the acquisition of 10 Joyce’s chain stores in the Galway area after receiving the green light for the deal from the Competition and Consumer Protection Commission in June.
Commenting on the overall results, Tesco chief executive Ken Murphy said: “We know our customers are facing a tough time and watching every penny to make ends meet. That’s why we’re working relentlessly to keep the cost of the weekly shop as affordable as possible, with our powerful combination of Aldi Price Match, low everyday prices and Clubcard prices, together covering more than 8,000 products week in, week out.
“As we look to the second half, cost inflation remains significant, and it is too early to predict how customers will adapt to ongoing changes in the market. Despite these uncertainties, our priorities are clear. We have the right long-term strategy and we will continue to balance the needs of all of our stakeholders.”