Supermarket group Tesco, Britain's biggest retailer, reported Wednesday that its annual net profit surged 62 per cent as easing UK inflation helped cost-conscious shoppers buy more products.
Profit after tax rallied to £1.2 billion in the 12 months to February, Tesco said in a statement, while sales increased 4.4 per cent to £68.2bn.
The retail giant's tills were boosted by an easing in Britain's cost-of-living crisis, though consumers remained wary after the economy entered recession in the second half of 2023.
"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," chief executive Ken Murphy said.
"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," he added.
"We have strong momentum in our business, and are encouraged by signs of improving consumer sentiment."
Tesco's growth was also supported by its strategy of cutting prices on about 4,000 products as inflation slowed but remained evident.
The retailer offers to match prices of similar goods sold by UK supermarkets run by the German discounters Aldi and Lidl.
"The impact of inflation was evident across all markets, although reduced gradually across the year as many global commodity prices fell and we passed savings on to customers by cutting prices across everyday grocery lines," Tesco said.
The UK's inflation rate has tumbled since striking a 41-year peak of 11.1 per cent in October 2022, following a series of aggressive interest rate increases by the Bank of England.
Inflation slowed more sharply than expected in February to stand at 3.4 per cent, the lowest level since September 2021, as growth in food prices eased further.
Tesco also said Wednesday that it would launch a £1bn share buyback programme over the next twelve months, and ramped up its annual shareholder dividend by 11 per cent.
The company announced in February the sale of its retail banking activities to British bank Barclays for around £700 million, as it concentrates on its core food business.
The deal is due to close in the second half of this year and Tesco has said it will return the majority of cash proceeds to shareholders.
