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Tesco Sees Return To Growth

onfilm iStock-171363191 Tesco
  • Market share gains and return to positive volume growth as customers shop more at Tesco

Tesco plc has published preliminary results for the 23/24 financial year ended February 24th, 2024.

Performance highlights (on a continuing operations basis)1,2

FY 23/24

FY 22/233

Change at actual rates

Change at constant rates

Group sales (exc. VAT, exc. fuel)4





Adjusted operating profit5





     -     Retail





     -     Tesco Bank1





Retail free cash flow6





Net debt6,7





Adjusted diluted EPS5





Dividend per share7





Statutory measures (on a continuing operations basis)1





Revenue (exc. VAT, inc. fuel)





Operating profit





Profit before tax





Retail cash generated from operating activities





Diluted EPS





Statutory measures (including discontinued operations)1





Profit for the year (after tax)





Diluted EPS





The results of our existing banking operations (credit cards, loans and savings) have been treated as discontinued following our 9 February 2024 announcement of the proposed sale to Barclays. As such, Tesco Bank results included in continuing operations above refer only to the retained Tesco Bank business, i.e. insurance and money services. Total Tesco Bank adjusted operating profit including discontinued operations was £148m1. 

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.

We have strong momentum in our business, and are encouraged by signs of improving consumer sentiment. We’re excited about the opportunities ahead, with the right plans to keep winning with customers, as well as a great team to deliver them.”

Sales growth across all markets and continued cost savings deliver strong financial performance:

  • 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

Winning with customers through investments in value, quality and service:

  • Strengthening brand perception in both value and quality; all customer satisfaction measures improving
  • Overall gains in both value and volume share in UK and ROI; UK value +28bps and volume +8bps, with 12 consecutive periods of switching gains; ROI value +73bps and volume +76bps, with 15 consecutive periods of switching gains
  • Latest market share results (to 17 March 2024) strengthened further, with UK value +53bps and volume +26bps
  • Unique customer offer combining Aldi Price Match on >600 lines, Low Everyday Prices on >1,000 lines and c.8,000 exclusive Clubcard Prices deals each week, means we have been the cheapest full-line grocer for 16 consecutive months
  • Investing in product quality and innovation, launching over 1,000 new products and improving c.2,700 existing lines
  • Value for money and quality reflected in 19 consecutive periods of net switching gains from premium retailers

Maintaining disciplined approach to investment whilst investing in high-returning future growth & digital capability:

  • Continued store expansion & improvement, with net increase of 87 stores (UK 74, ROI 4, CE 9) and 389 store refreshes
  • Developing AI technology solutions to drive productivity, competitiveness and value for customers, including new range optimisation tool which automates bespoke product selection based on store location and demographic
  • Enhanced transport scheduling system and new stock assembly processes driving greater supply chain efficiency
  • Started construction of fresh food distribution centre in Aylesford, Kent, incorporating robotic automation technology
  • Stepped up investment to support Booker growth, including conversion of Fareham Makro into c.120k sq.ft retail hub, unlocking more choice for retail customers and freeing up catering capacity
  • Continuing to selectively invest in high-returning initiatives, with total capital expenditure of £1.3bn in 23/24; expected spend of £1.4bn in 24/25
  • Entered into global grocery retail innovation partnership with Ahold Delhaize, Sobeys, Shoprite and Woolworths, to jointly invest in startups which accelerate growth and sustainability

Balancing the needs of all stakeholders to create long-term, sustainable value:

  • Largest ever increase in colleague pay, in addition to ‘Thank You’ payment for hourly paid colleagues and new wellbeing benefits, including virtual GP appointments and enhanced family leave
  • Investing in skills and employment with more hours for existing colleagues, the launch of a new retail apprenticeship programme, and plans to create c.2,000 additional UK roles across 70 new stores and our technology and online teams
  • Continued strong support for our communities with launch of Stronger Starts programme, funding activities and nutrition in 4,000 projects, and significantly increased donations to food banks and charities, now at 4 million meals per month
  • Improving product sourcing and efficiency of supply chain through collaboration with suppliers, contributing an additional £75m to British agriculture; #1 position in Advantage supplier survey for eighth year in a row
  • Healthy products now 63% of sales volume in UK and ROI, well on track to achieve 2025 target of 65%

Planned sale of banking operations and long-term strategic partnership with Barclays announced in February 2024:

  • Sale expected to complete in second half of 2024, generating c.£700m cash (net of transaction costs) made up of c.£600m consideration and c.£100m other net cash; planned sale results in a remeasurement loss of £(628)m (post-tax)
  • Combined with £250m special dividend paid to the Group by Tesco Bank in August 2023, expected to deliver c.£1bn of cash
  • Total Tesco Bank adjusted operating profit for the year of £148m, in line with guidance; including £69m from retained business (insurance and money services), presented within continuing operations
  • Banking operations classified as discontinued, with £79m adjusted operating profit excluded from headline performance
  • On an annualised basis, we expect the retained Tesco Bank business to generate £80m to £100m adjusted operating profit, including income from partnership with Barclays, enabling us to offer Tesco-branded financial products and services


Since launching our capital return programme in October 2021, we have now purchased £1.8bn worth of shares, including £750m in the twelve months to April 2024. We continue to see the buyback programme as an ongoing and critical driver of shareholder returns and we are pleased to announce that we will buy back £1.0bn worth of shares over the next twelve months, including £250m funded by the special dividend paid by Tesco Bank in August 2023. A further update on our plans for the return of the proceeds generated from the sale of our banking operations will be provided following completion.


The investments we’ve made to date have strengthened our offer to customers, made us more efficient, and more digitally capable, establishing a strong foundation for future growth. We are building a consistent track record of delivery against the performance framework we set out in October 2021.

For the 2024/25 financial year, we expect retail adjusted operating profit of at least £2.8bn. In addition, we expect total adjusted operating profit from the retained Tesco Bank business of around £80m, which includes a part-year amount of partnership income, based on the completion of the transaction towards the end of this calendar year. We expect to generate retail free cash flow within our guidance range of £1.4bn to £1.8bn.

Source : Tesco plc

Image : onfilm / / 171363191

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10 April 2024

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