Like-for-like Tesco Ireland sales fell 0.1% during the first half of 2022 compared to the same period of last year, but remain 12.1% ahead of pre-Covid levels.
The supermarket chain said the marginal decline in sales reflected a "post-pandemic normalisation" and changes in customer behaviour caused by the rising cost of living, although it saw a 0.7% annual increase in sales in the UK.
“The Covid-19 impact on the base was particularly strong," Tesco said of Ireland, "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%. This also reflected a gradual increase in inflation in the market.”
Overall, the Tesco Group recorded increased sales of £28.2bn (+3.1%) and an adjusted operating profit of £1.3bn, a decline of 9.8% year-on-year, during the first half of its financial year. Group net debt fell 1.7% to £10bn and £500m since February driven by strong cash generation.
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The UK and Ireland accounted for adjusted operating profit of just under £1.2bn, down 11.5% year-on-year as a result of reduced sales volumes, net cost inflation and ongoing investment.
On a statutory basis and included fuel sales at Tesco petrol stations, group revenues rose 6.7% to £32.5bn, while operating profit of £736m (-43.6%) and profit before tax of £413m (-63.9%) fell significantly after the group booked an £626m asset impairment charge driven by higher discount rates.
Tesco, which is the UK's largest supermarket chain with a 26.9% share of the grocery market and second in Ireland with a 21.9% share, described its performance in the UK as solid and in line with expectations.
The group credited its Aldi Price Match, Low Everyday Prices and Clubcard Prices with easing cost of living pressures, and said a 13% increases in sales of its Finest range showed shoppers were opting to eat in more often.
"We know our customers are facing a tough time and watching every penny to make ends meet," said Ken Murphy, CEO of Tesco.
"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.
"We’re also investing significantly in our colleagues, with a further boost to pay announced today for our UK stores."
Looking ahead, Murphy said inflation remains significant and that it was too early to predict how customers would adapt to ongoing challenges. Shares in the company have fallen nearly 30%, with investor confidence low in the face of rampant inflation.
For the full year, Tesco has forecast a retail adjusted operating profit of £2.4bn to 2.5bn, which is down from its previous forecast of £2.4bn to £2.6bn and from the £2.65bn made in 2021-2022.
In July, Tesco completed the acquisition of nine Joyce's stores, and they will all be refitted before they are reopened under the Tesco brands in the coming months.
(Pic: Tony Baggett/Shutterstock)
