Business

Tesco workers share bonuses of 50 million pounds, but the supermarket giant warns that inflation will hurt profits

Up to 290,000 Tesco workers should receive bonuses after the firm revealed that annual profits had more than tripled, but the company warns of much harder times amid rising inflation.

The UK’s largest private employer will pay almost £ 50 million in bonuses in the form of gratitude to employees in its stores, customer service centers and customer engagement of 1.25 per cent of their annual salary at the end of May.

The group said the payment “recognizes how colleagues really tackled the industry’s problems last year” and comes after it increased payments to more than £ 10 an hour.

In March, inflation in Britain reached a 30-year high of 7 percent, even before the sharp rise in utility bills in April. Rising prices have caused the biggest squeeze in household incomes, at least since the 1950s.

Tesco warns that the cost of living crisis will lead to lower incomes next year.

“Inflation is very real for everyone. It’s rising household costs and stretching finances. It has been many years since we last saw the rise in the cost of living at the rate it is today, ”said Ken Murphy, executive director of the supermarket chain.

He also said customer behavior is returning to more normal patterns as shoppers are less likely to travel to the supermarket after a pandemic.

Mr Murphy said: “Obviously the external environment has become more complex in recent months. Against the background of difficult conditions for our customers and under the pressure of home budgets, we are focused on keeping control of the costs of the weekly store – working in close partnership with our suppliers, and doing everything possible to reduce our own costs.

For the year to February 26, Tesco’s pre-tax revenue rose to £ 2.03 billion from £ 636 million the previous year due to increased sales and reduced costs associated with the pandemic. Basic operating income increased 58 percent to 2.8 billion pounds, while retail income rose 34.9 percent to 2.6 billion pounds.

Profits helped as costs for the Covid-19 fell to £ 220 million from £ 892 million the previous year.

Mr Murphy added: “Over the past year we have achieved good performance across the group, a growing share in every part of our business. “We have done this by focusing on our customers and doing the right things for our colleagues, our supplier partners and the communities we serve.”

The customer is shopping at a Tesco supermarket store in east London

(AFP via Getty Images)

He said Tesco is “laser focused” on maintaining the value of the weekly store and noted that cheaper own-brand products will play an important role. He said Tesco is in “excellent shape” to deal with the crisis.

Market data suggests that shoppers have begun to change their shopping habits to save money by choosing more own-brand products.

Analysts note that Tesco is benefiting from its strategy of matching prices at Aldi’s 650-line discount store, the popularity of the “club card price” loyalty scheme and the scale of the chain store.

“Tesco has proven its ability to masterfully navigate difficult times, and few will bet against it doing it again,” said Zoe Gillespie, Brewin Dolphin’s investment manager.

Reuters and PA contributed to this report

Tesco workers share bonuses of 50 million pounds, but the supermarket giant warns that inflation will hurt profits

Source link Tesco workers share bonuses of 50 million pounds, but the supermarket giant warns that inflation will hurt profits

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